Why it matters
The reconciliation is the proof that the books reflect the bank. Without it, a missing deposit, a duplicate payment or a bank fee can sit in the books for months and turn into a cleanup.
Example
The bank statement ends at $24,180 and the book balance is $24,905. The bookkeeper finds an outstanding check for $725 that has not cleared, records it in the reconciliation, and the two balances now agree.
Related terms
Questions about Bank reconciliation
How often should a bank reconciliation be done?
Every account should be reconciled at least monthly, after the statement arrives. A business with high transaction volume may reconcile more often.
What if the reconciliation does not balance?
Look for a missing transaction, a duplicate entry, a bank fee, an outstanding check or a transfer recorded in one account but not the other. Do not plug the difference without finding the cause.