What Is Bank Reconciliation?

Bank reconciliation is the process of comparing your recorded transactions in your accounting software against your actual bank statement, to confirm they match.

Discrepancies happen for ordinary reasons — a check that has not cleared yet, a bank fee that was never recorded, or a simple data-entry mistake. Reconciliation catches these before they compound into a larger, harder-to-untangle problem.

Done manually, reconciliation is tedious: matching line by line, often on paper or in a spreadsheet. Modern accounting software changes this by importing bank transactions directly and letting you match or categorize them quickly, with bank rules that can automatically categorize recurring transactions.

Regular reconciliation — ideally monthly — is one of the clearest signs of a well-run set of books, and it is often the first thing an accountant or auditor checks.