bank reconciliation

7 min

How to Do A Bank Reconciliation – 3 Steps With Pictures

When you run a small business, it is very likely that you are going to have to deal with your business bank statements. Here's How to Do a Bank Reconciliation. But don't worry. Learning how to do it isn't hard. You need to have three things to start: your bank statement, the cash book and a calculator.

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Start by gathering all the necessary documents

To carry out your bank reconciliation, you should have the following documents at hand:

  • The account statements for the period in question;
  • The relevant general ledger or 512 account statement;
  • The latest bank reconciliation statement;
  • Proof of cash movements (cheque remittances, cash remittances).

Get started by balancing the bank statement to the cash book

The first step in doing a bank reconciliation is balancing the bank statement to the cash book. This means that you will need to compare each transaction on your cash book with its corresponding transaction on your bank statement. This means adding up all deposits made into your account since the last time you reconciled it and subtracting any withdrawals from that total amount.

The goal here is to make sure that every single transaction matches up. If there are any discrepancies between these two records, then it is time for some detective work!

Now find the difference between the cash book and bank statement.

If there are any differences between these two sources of information, then it is time for some detective work! You will want to investigate where these differences are coming from so that you can make corrections accordingly in order to ensure that everything balances out correctly:

  1. Establish the starting balances: bank account balance and accounting account balance.
  2. Cross-reference the transactions between the bank account and the accounting account 512 :
  3. Establish the final match and show the reconciled balances.
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Update your cash book according to what is on your bank statement

Once you have updated your cash book according to what is on your bank statement, it's time to compare the two documents together so that you can see if there are any differences between them. The easiest way of doing this is by using Excel or another spreadsheet program because this allows you to easily add up all of the figures together and check for discrepancies between them; however, if you don't want to use one of these programs then simply add up all of the figures manually using pen and paper instead.

If there are any discrepancies between what you have and what's on the bank statement, this is where you'll need to add or remove transactions from the cash book to make them match up again.

Make a note of any differences in your reconciliation journal (or use a spreadsheet). Once you've made sure everything matches up, make a note of any outstanding items and how much they are so that you can get them paid off as soon as possible.

How to set up the perfect bank reconciliation process using Libeo?

Reconciling your business' bank account is an easy task that can be mastered with Libeo.

From your Libeo user space, find all the invoices for which a payment on your bank account has been detected. You will be able to perform your bank reconciliation from the "Get paid" page. Libeo payments will be reconciled automatically:

  1. Select an account from the drop-down list on the left, or create a new account..
  2. Enter your bank statement into Libeo and match it against the deposits in your current file.
  3. When you are done entering all transactions, click "To reconcile" to generate a report containing any missing transactions and/or debits/credits that need to be corrected.

The financial and accounting management of your company is time-consuming and suffers from a paradox: if it is not efficient, the company is in danger; when the company is efficient, it is never thanks to its accounting management. Indeed, the time freed up by the automation of administrative tasks allows you to concentrate on the raison d'être of your company: its growth.

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Libeo is registered by ACPR (Prudential Control and Resolution Authority) under the number 844679068 (approval can be consulted in the Register of Financial Agents – as a payment services agent of the electronic money institution Treezor. Treezor, registered in the Paris Trade and Companies Register under number 807465059, whose registered office is located at 33 avenue de Wagram, 75017 Paris, acting as an electronic money institution within the meaning of Article L.525-1 of the French Monetary and Financial Code and approved by ACPR (Prudential Control and Resolution Authority), is located at 4 Place de Budapest CS 92459 75336 Paris Cedex 09 as an electronic money institution under number 16798, approval which can be consulted on the ACPR website in the Register of Financial Agents (REGAFI):