Before You Start

This guide assumes you have an unreconciled bank account in your accounting software and the corresponding bank statement.

Overview

15 min
Setup Time
Intermediate
Difficulty
Monthly
Maintenance

What You’ll Learn

  • How to identify common reconciliation discrepancies
  • Strategies for correcting mismatched transactions
  • Techniques for handling missing or duplicate entries
  • Tips for reconciling complex transfers and payments

1. Common Reconciliation Challenges

Reconciliation is a critical month-end task, but it often surfaces a few recurring issues:

Typical Problems

  • Duplicate transactions
  • Incorrect amounts or dates
  • Missing entries
  • Transfers not recorded correctly

Why They Happen

  • Manual data entry errors
  • Sync issues with integrated apps
  • Forgotten or miscategorized transactions
  • User oversight during the initial setup

2. Identifying the Discrepancy

Pinpointing the exact error is the first step towards a successful fix.

Diagnostic Checklist

  • Review bank statement line by line against your ledger
  • Compare starting and ending balances for the period
  • Look for cleared items in the bank that are uncleared in your software
  • Note transactions with similar amounts or dates for potential mismatches

3. Step-by-Step: Fixing Common Errors

Once identified, most reconciliation errors can be fixed systematically.

Error Type A: Duplicate Transactions

These often occur due to syncing errors or accidental manual entry.

Fixing Duplicates:
  • Easy to identify.
  • Often simple to delete or void.
  • Restores correct balance quickly.
Considerations:
  • Already reconciled transactions are tricky.
  • May require a journal entry adjustment.
  • Impacts historical reporting if not careful.

To fix a duplicate: Locate the duplicate transaction in your accounting software. If it hasn’t been reconciled, simply delete or void it. If it has already been reconciled, you may need to ‘undo’ the reconciliation for that specific transaction or create a reversing journal entry.

Error Type B: Mismatched Amounts or Dates

These are often human entry errors or minor sync glitches.

When an amount or date differs slightly between your bank statement and your software, you’ll need to adjust the software’s entry:

  1. 1

    Locate the Transaction

    Find the transaction in your accounting software that corresponds to the bank statement entry.

  2. 2

    Edit the Details

    Carefully edit the amount or date in your software to match the bank statement exactly.

  3. 3

    Clear and Reconcile

    Mark the now-corrected transaction as cleared and proceed with reconciliation.

Error Type C: Missing Transactions

This happens when an entry on your bank statement isn’t in your software.

If a transaction appears on your bank statement but not in your accounting software, you need to manually add it:

  • Review your bank statement thoroughly to ensure it’s not a misunderstanding.
  • Manually enter the missing transaction into your accounting software.
  • Ensure the date, payee, amount, and account categorization are correct.
  • Clear the newly entered transaction so it can be reconciled.

Common Error: Inter-Account Transfers

Make sure inter-account transfers are recorded as transfers (not deposits/withdrawals) in both the sending and receiving accounts to avoid duplication or missing entries on one side.

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