Sorting Out Your Accounts

What to Do If Your Bank Balance Does Not Match Your Local Ledger

by Lydia Washington

If you run a growing small business, you may have to deal with increasing complexity. With the expansion, you can expect a lot more customers, each one with their own demands, and you may also have to deal with a large number of suppliers, vendors and contractors. Of course, money makes the world go round, and each one of these entities will either pay you money or demand it, so you need to keep on top of your books. Yet how do you reconcile all of these transactions when it comes to the end of your accounting period? Also, why do your figures never match those bank statements?


In an ideal world, your local records would exactly match the figure at the bottom of your bank statement on reconciliation day. This is very rarely the case, however, for various reasons.

Systematic Check

To identify all the discrepancies, you should go through each entry, one by one, and cross-check against the local records. Begin with the deposits and remember that you may have added several different cash receipts together before taking them to the bank on any given day. Therefore, you need to break apart that total and cross-reference against each paid invoice until you've accounted for all the transactions.

Missing Cheques

Next, have a look at your outgoings. Have you written any supplier cheques that they haven't presented to the bank for payment? This is a common cause of a discrepancy, and you will need to add that item to your list of reconciliations.


You may not have taken into account any costs that are generated by the bank itself. These may only become evident when you receive the statement, but you'll need to add interest or transaction fees, overdraft charges and other items to your local ledger.

Bank Errors

It is very rare, but you may uncover a mistake in the bank statement. You will, of course, need to get in touch with the bank for them to reverse this, but in the meantime, you will have to make a temporary entry in your local ledger.

Keeping on Top

Many business owners are very busy and do not have the opportunity to reconcile these accounts on a weekly or monthly basis. Sometimes, they may leave it until tax time approaches and may then find it very difficult to reconcile many months of transactions. This is why it is a good idea to employ the services of a bookkeeper. They will reconcile all the accounts and make sure that they pick up any errors or issues sooner rather than later.