Reconciliation in accounting, answered.

In accounting, to reconcile means to compare two records of the same money and explain every difference between them, until the two agree. Accounting reconciliation, also called the reconciliation of accounts, is that check carried out on each balance in the books: the bank account against the bank statement, the sales ledger against what customers have paid, a supplier's account against the supplier's statement.

A reconciliation does not change either record by itself. It produces a list of differences, and each one is either a timing difference that will clear on its own, or an error or omission that needs an entry. Bank Reconciler automates the comparison for bank, invoice and payment reconciliation.

In finance, reconciliation is the control that proves the numbers a business reports are backed by an independent source. A finance team reconciles cash to the bank, receivables and payables to customer and supplier records, card and payment processor accounts to their statements, and balance sheet balances to supporting schedules, usually every month before the management accounts are signed off.

The point is assurance: an unreconciled balance might be right, but nobody can show that it is.

Accountants usually group them into three families. Bank reconciliation, sometimes called cash reconciliation, compares the bank statement with the cash book. Customer and supplier reconciliation compares the sales and purchase ledgers with statements and payments. Balance sheet reconciliation compares each remaining balance, such as accruals, prepayments, VAT and loans, with the evidence behind it.

Bank Reconciler covers bank reconciliation and invoice-to-payment matching. Balance sheet reconciliation is done in your accounting software or, at the year end, in working papers such as those PrepIQ prepares.

Account reconciliation is checking that the balance on one account in the general ledger agrees with an outside record of it. For example, the supplier's account in the purchase ledger shows £3,600 owed, but the supplier's statement says £4,200. Reconciling the two finds a £600 invoice the supplier issued on the last day of the month that has not yet been posted. Post it, and both say £4,200.

Bank Reconciler can tick a supplier statement against the purchase ledger the same way it ticks a bank statement against the books: upload both as two transaction lists in the bank method and it lists what is on one side only.

For any account the method is the same. Pick the account and the date. Get an independent record of the same balance: a bank statement, a supplier statement, a loan statement, a payroll report. Match the entries on each side and list what is left. Explain every item on that list as either a timing difference or an error, post the corrections, and check the two balances now agree. Then have someone else review it and keep the working on file.

For bank accounts and invoice payments, Bank Reconciler does the matching and builds the list of differences for you.

A control account is the single total in the general ledger that stands for a whole subsidiary ledger: trade debtors for the sales ledger, trade creditors for the purchase ledger. Reconciling a control account means checking that the total in the general ledger equals the sum of the individual customer or supplier balances. A difference points to an entry posted to one but not the other.

Reconciliation in accounts payable extends the same idea to each supplier: the purchase ledger balance is reconciled to that supplier's statement. The reconciliation of accounts receivable does the same for each customer, against the invoices raised and the payments received.

On a bank reconciliation the usual four are: outstanding lodgements (deposits in transit: money banked but not yet on the statement), unpresented cheques or payments (paid out in the books but not yet cleared), bank charges and interest that appear only on the statement, and errors on either side, such as a transposed figure or a duplicate entry. The first two are timing differences and need no entry. The last two need correcting in the books.

Bank reconciliation is the regular check that the bank account in your books agrees with the bank's own statement. You match each statement line to its entry in the cash book, explain whatever is left, such as payments not yet cleared, lodgements not yet credited and bank charges nobody posted, and correct the books where they are wrong. It is the most common reconciliation in accounting, and Bank Reconciler automates the matching.

A bank reconciliation statement is a short schedule that explains the difference between the balance on the bank statement and the balance in the cash book on the same date. It starts from one balance, adds and subtracts each timing difference and unrecorded item, and shows that both adjusted balances agree. The usual format of a bank reconciliation statement takes the bank side first (statement balance, plus lodgements not yet credited, less cheques not yet presented) and then the cash book side (book balance, plus interest and receipts not yet recorded, less charges and direct debits not yet recorded).

Here is a sample of a bank reconciliation statement for a florist at 31 March. For one you can fill in and download as Excel, use the free bank reconciliation template.

The purpose of bank reconciliation is to prove the cash figure in the books is right. Why is bank reconciliation important? Because the bank is an independent record, and agreeing to it catches missed and duplicated entries, bank charges nobody posted, payments that never cleared, and fraud such as an unauthorised payment or a cheque altered after it was written. It is also the base every other report rests on: VAT returns, management accounts and year-end accounts all assume the bank balance is correct.

A bank reconciliation statement is prepared by the business's bookkeeper or accountant, not by the bank. In a small business that is usually the bookkeeper or the owner; in a larger one, someone in the finance team who does not also make payments, so the check stays independent; in a practice, the accountant or bookkeeper looking after the client. A reviewer then signs it off.

At least once a month, when the statement period closes and before the month's figures are reported, and always at the year end and before each VAT return. Busy accounts and those with a lot of card or payment processor traffic are worth reconciling weekly or even daily, because differences are far easier to explain while they are fresh.

The bank reconciliation process has five steps. Get the statement and the cash book for the same period. Match each statement line to its entry in the books. List what is left on each side: lodgements not yet credited, payments not yet cleared, and charges, interest or direct debits not yet recorded. Post the items that belong in the books and note the timing differences. Then check that the two adjusted balances agree. Some guides split the same work into seven steps, listing the bank side and the book side adjustments separately. The Bank Reconciler guides walk through these bank reconciliation steps in the tool.

Most bank reconciliation problems come from a short list: an item recorded in the books but not yet on the statement (or the reverse), a bank charge or interest nobody posted, a duplicate entry, a transposed figure (a difference divisible by nine is a classic sign), a payment posted to the wrong bank account, a batch payment recorded as one line on one side and several on the other, and an opening balance that never agreed in the first place. Work through those in order and almost every one of the reconciliation discrepancies is found.

Bank Reconciler's exceptions list is that same list, sorted: each unmatched line on either side, with its single most likely match and a confidence score where one exists.

Bank reconciliation is one kind of account reconciliation: the one where the outside record is a bank statement. Account reconciliation is the wider practice of agreeing any balance in the books to independent evidence, whether that is a supplier statement, a loan statement, a payroll report or a fixed asset register.

Bank Reconciler is automated reconciliation software from ReconcileIQ. It matches a bank statement against the books, line by line, and lists every discrepancy; a second method matches invoices to the payments that settled them. It runs in the browser, takes CSV exports and PDF statements from any bank, and connects to Xero, QuickBooks, Sage, Pandle, FreeAgent and YNAB.

Upload the bank statement and the books, as CSV files (up to 12 a side, merged into one) or pulled from your accounting platform. Check the column mapping: date, description and amount are detected for you. Run the match. Review the results: matched pairs, items on one side only, and a possible match for an unmatched line where there is one. Then export the report, or push fixes back to the platform. A typical month takes a few minutes.

No. Bank Reconciler runs in the browser on any computer, with nothing to download or update. Create an account, sign in and start reconciling.

Xero and QuickBooks reconcile the bank data already inside them, one feed line at a time. Bank Reconciler works across platforms and off-platform: it reconciles a statement your software cannot import, a bank the feed does not cover, an old system's export against a new one after a migration, and hundreds of lines in one run. Missing lines go back to the connected platform as proper entries, and on most platforms entries that should not be there can be removed too.

A match needs the amount to agree, within a small tolerance, and the date to fall inside the matching window. Each settled match is shown as an exact match or with the number of days between the two dates. Where more than one entry has the same amount, the descriptions decide which is the right one: a bank line reading PYMT*AMAZON pairs with the book entry called Amazon.com order rather than another payment of the same value. Batch matching then pairs one line on one side with several on the other when they fall on the same day and add up. Any line left unmatched is shown with its most likely match and a confidence score. All of this is included on every plan.

Yes. Invoice and payment reconciliation, which is what payment reconciliation usually means, pairs each invoice with the payment that settled it. It is the second method, chosen on the upload screen. Upload the invoice list and the payment list as CSV files. It weighs the amount most, then the description, then the date, and returns the matched pairs, the invoices with no payment and the payments with no invoice, each with a confidence score. How the two methods work.

Three exports. A PDF of the current view, for the filtered list you are looking at. A full report PDF, showing what is missing from the books, what is extra in the books, the net difference and the confirmed matches. And a CSV of the missing and extra items, which can usually be imported straight into your accounting software.

Yes, by OAuth to QuickBooks Online, Xero, Sage, Pandle, FreeAgent and YNAB: choose the account and the dates and the books come in without an export. Fixes can then be pushed back. Lines missing from the books are added on every connected platform; in Xero, for example, they post as reconciled spend and receive bank transactions. Entries that should not be there can be removed in Xero, QuickBooks, Pandle, FreeAgent and YNAB; Sage supports adding only. A connection is optional: CSV files from any bank or accounting system work just as well.

A general chatbot can explain a reconciliation and tick off a short list, but it is not built for a full statement: it can drop or invent lines in long tables and leaves no audit trail. Use software built to match transactions. Bank Reconciler matches every line on a compiled engine, shows whether each pair agreed exactly or how many days apart the dates were, and offers the most likely match for anything left, so the person reviewing makes the final call.

They are separate ReconcileIQ products that use the same account and credits. Once the bank is reconciled, LedgerIQ takes the general ledger export and produces management accounts, 44 analysis modules and a written board pack. A full LedgerIQ analysis uses 1,000 credits.

CSV for both the bank and the books, up to 12 files a side, which are merged into one; save an Excel export as CSV first. PDF bank statements go through the built-in converter, which turns them into CSV. Inside those files it reads more than 20 date formats, UK and US alike, single amount columns or separate debit and credit columns, negatives written as −50, (50) or 50 DR, currency symbols and different decimal and thousands separators.

From online banking, open the account's transactions, choose the date range and look for Download or Export, then pick CSV. From the accounting software, open the bank account's transaction list for the same dates and export it the same way, usually under Reports or More actions. If the bank only offers a PDF, upload that instead. The tool also carries step-by-step export instructions for the main banks and platforms.

Any bank. The universal parser reads digital PDFs, scanned statements and phone photos without a per-bank template. It is field-tested with Lloyds, HSBC, NatWest, Monzo, Metro Bank, RBS, Wise, Starling, Tide, Barclays, Santander, Halifax, TSB, Revolut and Chase UK, and it reads layouts it has never seen. A bulk mode converts a batch of monthly statements in one go. Conversion is available on paid plans or with purchased credits, plus one free conversion once your email is confirmed, and uses two credits a line. Bank statement converter.

Matching runs on a compiled C++ engine at more than 5,000 transactions a second, so a month of a busy account clears in seconds and a year of transactions in minutes. The upload is usually the slowest part.

Each file can be up to 10MB, which is many thousands of transactions as CSV. Split a larger export into shorter periods and reconcile them in turn. Beyond that, the number of lines you can reconcile is set by your credit balance.

Current versions of Chrome, Edge, Firefox and Safari on Windows, Mac or Linux. It works on tablets and phones, but reviewing a long list of transactions is far easier on a laptop or desktop screen.

Free: 1,000 one-off credits that never expire, no card, added once you confirm your email. Starter: 5,000 credits a month for £5. Accountant: 25,000 credits a month for £15. Practice Essential: 50,000 credits a month for £78. Practice Pro: 150,000 credits a month for £158. Enterprise: 500,000 credits a month for £398. Annual billing costs less. Paid plans can also turn on pay-as-you-go overage at a per-credit rate: Starter £0.002, Accountant £0.0015, Practice Essential £0.002, Practice Pro £0.0016 and Enterprise £0.001. The same credits work across the ReconcileIQ products; PrepIQ needs a practice plan. Pricing.

One credit reconciles one line of the bank statement; the books file is not counted. Converting a PDF statement uses two credits a line. A statement with 400 lines reconciled against 420 lines in the books uses 400 credits. Paid plans refresh their credits at the start of each billing cycle and unused monthly credits do not carry over. If you run out, you can buy a credit pack or, on a paid plan, turn on pay-as-you-go at your plan's overage rate, up to a monthly cap you set. Your balance is shown in the dashboard.

Yes, at any time from Manage subscription in your account. An upgrade takes effect straight away, with the price pro-rated for the rest of the billing period, and the extra credits are available immediately. To move to a lower plan, first check your typical usage against the lower plan's monthly credits, then cancel the current subscription, keep using it until the end of the period you have paid for, then subscribe to the lower plan; your bonus credits are kept.

Yes. Credit packs of 1,250 (£3), 5,000 (£8), 12,500 (£15) and 37,500 (£35) are added to your account straight away and do not expire. Buy them from Manage subscription, as often as you need. If you top up every month, the next plan up usually works out cheaper.

Data is encrypted in transit and at rest with AES-256. Uploaded files are processed in isolated environments and deleted automatically within minutes; transaction data is not stored permanently on our servers. Access to your account is protected by your own sign-in, and connections to accounting platforms use OAuth tokens that are stored encrypted. Security details.

Yes. ReconcileIQ is GDPR compliant and registered with the ICO. Data is minimised by default, uploaded files are deleted after processing, and deleting your account removes its saved data and connections. The privacy policy explains how personal data is handled and how to exercise your rights.

No. Bank statements are uploaded as files, so no bank login is ever involved. Connections to Xero, QuickBooks, Sage, Pandle, FreeAgent and YNAB use OAuth: you sign in on the platform's own page and we receive a revocable token, never your password. Tokens are stored encrypted and you can disconnect at any time.

The uploaded files are deleted from our servers within minutes of processing. The results are kept in your own browser, so you can reopen a saved reconciliation later on the same device, and you can export the reports for your records at any time. Export anything you need to keep elsewhere before clearing your browser data.