Reconciliation is the check that makes every other number believable. Done monthly, it catches errors and fraud while they're still small.
Reconciliation gets treated as a chore. It's actually the control that validates everything else. Until your books agree with the bank, every report you run is a guess. Once they agree, you know the cash is real, the expenses are recorded, and anything that does not belong has a chance to surface.
We reconcile accounts for growing companies across Kentucky, from Lexington and Nicholasville to Louisville and remote clients statewide. The process is unglamorous and non-negotiable. Bank accounts, credit cards, loans, and merchant accounts all get tied to their statements, and anything that doesn't match gets chased down rather than plugged with a journal entry.
A month that ties out cleanly is worth the effort for what it rules out. Duplicate payments to the same vendor, which happen more than owners expect. Charges from subscriptions nobody remembers signing up for. Bank fees that don't match the agreement. Deposits recorded but never actually deposited. Checks that were written and never cashed, still sitting outstanding six months later. And occasionally, unauthorized transactions. Monthly reconciliation is how those get found within weeks instead of during a year-end scramble.
Most businesses reconcile the operating checking account and stop there. That leaves gaps. Credit cards carry heavy transaction volume and are where miscoding concentrates. Loans and lines of credit need reconciling so principal and interest split correctly and the balance sheet shows real debt. Merchant accounts like Stripe or Square deposit net of fees, and if the gross-versus-net split isn't handled, both revenue and expenses are understated. Payroll clearing accounts need to zero out. Any account with a statement should be reconciled against it.
Accounting software will let you close out a reconciliation that doesn't balance by booking the difference to an adjustment account. It's fast and it's tempting and it's how books quietly rot. Every forced entry hides something real, and those unresolved differences accumulate until the balance sheet is meaningless. Doing this properly means finding the cause instead of papering over the gap. Sometimes that takes an extra hour. It's a much better hour than the twenty you'd spend untangling three years of plugs later.
No. Auto-matching pairs a book entry with a feed entry, which is useful but not the same thing. Reconciliation compares your book balance to the actual statement balance and accounts for every difference. A feed can miss transactions or drop a connection entirely, and auto-matching won't tell you that happened.
Usually back to the last point where the books were known to be correct, which may be further than you'd like. If nothing has ever been reconciled, the practical starting point is often the beginning of the current or prior fiscal year, with a judgment call on how much older history is worth rebuilding.
It can, and some clients start there. In practice most reconciliation problems trace back to how transactions get coded in the first place, so reconciling without fixing the entry process means finding the same issues every month. Many clients fold it into a monthly close instead.
Other work in this area that tends to come up in the same conversation.
Vendor bills entered, approved, and scheduled so payments go out on time and what's owed is visible before it's due.
Read moreInvoices out promptly, payments applied correctly, aging reviewed regularly. Slow-paying customers get spotted while something can still be done.
Read moreProfit and loss, balance sheet, and cash flow statements prepared from closed books, formatted the way lenders and partners expect to see them.
Read moreBook a consultation. Bring whatever you have, even if it is a mess, and we will tell you straight what it needs.
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