A bank reconciliation proves the cash in your books is real. It only works if every item is explained.
Start from the bank statement balance and the cash book balance on the same date. On the bank side, add deposits in transit and deduct unpresented payments. On the book side, add receipts the bank has but you haven't recorded and deduct bank charges. Match items line by line, investigate anything left, and the two adjusted balances should agree exactly.
Use three sheets: Bank (the statement lines), Book (your cash book lines), and Rec (the reconciliation). Give both Bank and Book the same columns: date in B, reference in D, amount in C (receipts positive, payments negative).
On the Bank sheet, add a match flag that looks for the same amount in the cash book within three days:
=COUNTIFS(Book!$C:$C,C2,Book!$B:$B,">="&B2-3,Book!$B:$B,"<="&B2+3)>0Add the mirror formula on the Book sheet. Anything FALSE on either side is a reconciling item. Where several items share an amount, confirm the match by reference too.
| Bank side | Book side |
|---|---|
| Balance per bank statement | Balance per cash book |
| + Deposits in transit (in book, not yet on bank) | + Receipts on bank not yet in book (interest, direct receipts) |
| − Unpresented payments (in book, not yet on bank) | − Bank charges and direct debits not yet in book |
| ± Bank errors | ± Book errors |
| = Adjusted bank balance | = Adjusted book balance |
Add a difference cell, adjusted bank minus adjusted book. It must be exactly zero. Never close the gap with a "balancing" line.
Items on the book side, such as bank charges, interest and direct debits, need a journal entry. Post them, then the cash book balance itself moves to the adjusted figure.
Add the date to every reconciling item and calculate its age. Deposits in transit should clear within days. Unpresented payments older than a month or two need chasing; very old ones may need reversing. An item that appears on every reconciliation is a finding, not a fixture.
The preparer signs and dates. A reviewer who doesn't process payments or handle receipts checks that the statement balance agrees to the actual statement, that open items are genuine and current, and that the difference is zero. See segregation of duties.
Bank reconciliation is one part of the wider balance sheet reconciliation process.
Terminology: UK teams say "unpresented cheques" and "uncleared lodgements"; US teams say "outstanding checks" and "deposits in transit". The method is identical.
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The Bank Reconciliation Template reconciles up to five bank accounts across eight transaction categories, with an allocation check that confirms every transaction is coded before the reconciliation counts as clean. Excel, no macros, one-time price.
At least monthly. High-volume or high-risk accounts benefit from weekly or even daily reconciliation.
Check the opening balances first, then items with the same amount matched to the wrong line, then transpositions. A difference divisible by 9 often points to a transposed figure.
No. The reconciliation is a check on payments, so it should be prepared or at least reviewed by someone independent of them.
Last updated 18 October 2026. General guidance for finance teams; check it against your own policies, systems and local rules.