Accurate financial records are the foundation of sound business decisions. One of the most critical monthly accounting tasks is bank and credit card reconciliation. Regular reconciliations help businesses detect errors, prevent fraud, and ensure financial statements reflect true cash positions.
At Trusty Accounts, we help businesses maintain clean and compliant books through structured reconciliation processes. This guide explains how monthly bank and credit card reconciliations are performed, step by step, using professional accounting standards.
What Is Bank and Credit Card Reconciliation?
Reconciliation is the process of comparing:
-
Bank and credit card statements issued by financial institutions
with - Internal accounting records maintained in bookkeeping software
The goal is to ensure both records match and to identify discrepancies such as missing transactions, timing differences, or errors.
Why Monthly Reconciliations Are Essential
Monthly reconciliations help businesses:
- Maintain accurate cash balances
- Detect unauthorized or duplicate transactions
- Ensure expenses and income are properly recorded
- Support tax filings and audits
- Maintain compliance with accounting standards
Without regular reconciliations, errors can compound and lead to misleading financial reports.
Step-by-Step Process for Monthly Bank Reconciliation
1. Collect Required Documents
Gather the following for the reconciliation period:
- Bank statements (PDF or CSV)
- Internal general ledger or cash account reports
- Check registers and deposit records
2. Match Opening Balances
Verify that:
- The opening balance in the accounting system matches
- The closing balance from the prior month’s bank statement
Any mismatch must be corrected before proceeding.
3. Compare Deposits
Match all deposits listed on the bank statement with:
- Customer receipts
- Sales income entries
- Other inflows recorded in the accounting system
Identify:
- Deposits in transit
- Missing or duplicate entries
4. Compare Withdrawals and Payments
Review all withdrawals, including:
- Vendor payments
- Payroll transactions
- Bank fees
- Automatic debits
Ensure each transaction is accurately recorded and categorized.
5. Identify Timing Differences
Some transactions may appear in one record but not the other due to:
- Outstanding checks
- Delayed deposits
- Pending electronic transfers
These are valid differences but must be documented.
6. Record Adjustments
Post necessary journal entries for:
- Bank service charges
- Interest earned
- Errors identified during review
7. Verify Ending Balance
After adjustments, confirm that:
- The reconciled book balance equals the bank statement ending balance
This completes the bank reconciliation.
Credit Card Reconciliation Process
Credit card reconciliations follow a similar structure but focus on expense accuracy.
1. Obtain Monthly Credit Card Statements
Collect statements for all business credit cards used during the period.
2. Match Transactions to Expense Records
Compare each charge with:
- Receipts
- Vendor bills
- Expense entries in the accounting system
Confirm correct classification (e.g., travel, software, office supplies).
3. Review Payments and Credits
Ensure:
- Payments made to the credit card are properly recorded
- Refunds and credits are captured accurately
4. Identify Unrecorded or Duplicate Charges
Flag:
- Missing expenses
- Duplicate postings
- Personal or unauthorized charges
5. Reconcile Statement Balance
Confirm that the ending balance matches the accounting records after adjustments.
Best Practices for Accurate Reconciliations
- Perform reconciliations monthly (not quarterly or annually)
- Use accounting software such as QuickBooks, Xero, or Zoho Books
- Maintain supporting documents for every transaction
- Assign reconciliations to a dedicated accounting professional
- Review reconciliations before financial reporting
Common Reconciliation Errors to Avoid
- Skipping months and trying to reconcile in bulk
- Ignoring small discrepancies
- Not reviewing bank fees and interest entries
- Mixing personal and business transactions
- Failing to document reconciliation differences
How Trusty Accounts Supports Reconciliation Services
Trusty Accounts provides:
- Monthly bank and credit card reconciliations
- Error identification and correction
- Clean, audit-ready financial records
- Reconciliation support across multiple bank accounts
- Integration with QuickBooks, Xero, and Zoho Books
Our structured approach ensures accurate books, improved cash visibility, and full compliance.
Final Thoughts
Monthly bank and credit card reconciliations are not optional—they are essential for maintaining financial accuracy and business credibility. A disciplined reconciliation process helps businesses stay compliant, prevent losses, and make informed decisions.
Trusty Accounts ensures your reconciliations are completed accurately and on time, every month.