Bank Reconciliation

Understanding Bank Reconciliation

Bank reconciliation is the process of comparing your internal accounting records against your bank statement to ensure every transaction is accounted for and the balances agree. Any discrepancies — missing transactions, duplicates, or incorrect amounts — are identified and corrected during this process.

The reconciliation process typically involves matching each transaction in your books to a corresponding entry on the bank statement, identifying deposits in transit (recorded in your books but not yet on the statement), outstanding checks, bank fees, and interest that may not yet be in your books.

Regular bank reconciliation — ideally monthly — is a fundamental internal control that catches errors, prevents fraud, and ensures your financial statements are accurate. For ecommerce sellers dealing with multiple payment processors, reconciliation is especially important because each platform has its own fee structure and settlement timing.