Checked against the statement the bank issued, not the feed your books came from. Monthly reconciliation that balances exactly, from a Cedar Rapids accountant who works with trades.
Bank Statement Reconciliation in Cedar Rapids, done the Brightside way Bank statement reconciliation works the paper trail itself: each monthly statement checked line by line against your books, so…
Read the guideA cleaning company owner in Cedar Rapids told us her books were reconciled every month. Her previous bookkeeper had said so, and the file did show reconciliations completed.
What had actually been happening was that every transaction in the bank feed was being ticked off against the file. Since the transactions in the file had all come from that same feed, of course they matched. It proved nothing. When we pulled the actual bank statements, three cheques totalling $4,900 had been written and never recorded because they never appeared in the feed, and one deposit had been keyed as $1,340 instead of $3,140. Fourteen months of reconciliations, all reported as clean. Her balance sheet had been wrong by about six thousand dollars the entire time.
Bank statement reconciliation means checking your books against the statement the bank issued. Not against the feed. That difference is the whole job.
The feed is a convenience. The statement is the evidence.
A bank feed is a stream of transactions your bank sends to your accounting software. It is fast, it saves an enormous amount of typing, and it is not an independent record. It is a copy of part of what the bank holds, delivered to the same file it will later be compared against.
A statement is different. It is the formal record the bank issues for a period, with an opening balance, a closing balance and every item in between. It is what a lender asks for, what an auditor would use, and the only thing worth reconciling against.
As a Cedar Rapids accountant working mostly with trades and service businesses, this is one of the few places where the technically correct method genuinely matters. It runs monthly as part of monthly bookkeeping.
14 months of clean reconciliationsAll of them checked the file against the feed the file came from. Three unrecorded cheques and one keying error later, the balance sheet was out by about six thousand dollars.
It is circular, and it is extremely common.
If transactions enter your books from the feed, and you then confirm your books agree with the feed, you have confirmed that a copy matches its source. Nothing has been verified. Anything the feed missed is still missing, and anything entered incorrectly by hand is still wrong.
The statement catches both. It is produced independently by the bank, it includes items that never reach a feed, and its closing balance is a figure your books have to land on exactly.
That final point is the test. A genuine reconciliation ends with your book balance equalling the statement balance once outstanding items are accounted for. If a reconciliation never produces that number, it was not a reconciliation.
Six things, all of them ordinary, none of them exotic.
For businesses still taking cheques, and plenty of Cedar Rapids trades do, the first two account for most of the difference between what the file says and what the bank says on any given day.
Your book balance and your bank balance should not match, and that is fine. Outstanding cheques and deposits in transit make a legitimate difference. What matters is that every part of the gap can be named.
The most misunderstood part of reconciliation, and the reason people think something is wrong when it is not.
Say your books show $22,400 and the statement closes at $26,100. That $3,700 gap is not automatically an error. If you wrote three cheques near the end of the month that have not been cashed, the money has left your books but not the bank.
A completed reconciliation names every element of that difference. Cheque 1043 for $1,200, cheque 1044 for $1,850, cheque 1045 for $650. Add them back and the figures agree exactly.
What should concern you is an unexplained difference, or a reconciliation that has been forced to balance with an adjusting entry nobody can account for. That entry is not a fix. It is a note saying somebody gave up.
The other half of outstanding items is the ones that never clear.
A cheque written eight months ago that has still not been cashed is worth investigating. Either it was lost, the recipient never received it, or it was recorded twice and only one version exists in reality.
Left alone, stale outstanding items accumulate and make every subsequent reconciliation harder to read, because the list of legitimate differences gets longer every month until nobody can tell the real ones from the abandoned ones.
We review anything outstanding beyond about sixty days rather than carrying it forward indefinitely.
A small practical problem that trips people up constantly.
Plenty of business accounts close on a date that is not the last day of the month. A statement running the 18th to the 17th does not line up with a calendar month, so reconciling it against a month-end book balance produces a difference that is entirely structural.
The fix is either reconciling to the statement period and then rolling to month end, or asking the bank to change the cycle date, which most will do on request. Either works. Ignoring it produces a reconciliation that never quite ties and slowly convinces everybody it is not worth doing.
What causes differences depends heavily on how you get paid.
For construction and framing crews around Cedar Rapids and Marion, cheques are still common on commercial work and outstanding items can run large. A single $14,000 progress payment cheque sitting uncashed across a month end changes the picture substantially.
For lawn care and landscaping in Robins, Hiawatha and out toward Lisbon, the issue is volume and season. Hundreds of small residential payments arriving between May and September mean more items to match and more chance of one going astray in the busiest weeks.
For mobile trades taking card payments, processor deposits are batched and arrive net of fees, so what lands in the bank rarely matches any single sale. Reconciling that requires the processor statement alongside the bank one.
We work across the whole service area, out to Mt Vernon, Ely, Swisher, Springville, Bertram and Covington.
Both take the same name. Only one produces a file you can rely on.
The difference is a few minutes a month per account. It is also the difference between a reconciliation report that means something and one that is decoration.
The actual issued statement, not the feed, downloaded for the period being closed.
Each transaction on the statement located in the file, and each item in the file located on the statement.
Cheques not yet cashed and deposits in transit itemised, so the difference between the two balances is fully explained.
If it does not tie, we find out why rather than posting an adjustment to make it look finished.
You write cheques, take cheques, use a card processor, or have ever been told your books were reconciled without seeing what that meant in practice.
Reconciling the bank alone is not enough on its own. Loans, credit cards, processors and payroll liabilities all need the same treatment, which is covered on the account reconciliation page.
Every month, every account with one. It is the only version of this work that actually verifies anything.
An adjusting entry to make a reconciliation tie is a way of hiding a problem. If something does not agree, we find out why.
Anything sitting beyond about sixty days gets looked at rather than carried forward forever.
Included in monthly bookkeeping, and it is part of what sets the price.
Flat monthly fees start at $350. How many accounts need reconciling is one of the three things that determines your number, alongside transaction volume and payroll. If accounts have gone a long time without a proper reconciliation, catching up is quoted flat as a cleanup, from $350. Details are on the pricing page.
Ask whoever does your books to show you last month's reconciliation report. It should end with your balance and the statement balance agreeing exactly, with every outstanding item named.
It starts with a free Books Health Check. Fifteen minutes, screen shared, your file open. We look at when each account was last reconciled, whether it balanced without an adjustment, and how long the outstanding list has been growing.
Those three things tell you quickly whether reconciliations have been happening or just being reported.
Call (319) 382-9017 or use the contact page. You get a real reply within one business day.
Reconciling the bank is one account. These cover the rest.
Only if it was reconciled against the issued statement and it balanced exactly. Software will happily mark an account reconciled after somebody ticks items off a feed, which verifies nothing.
Usually outstanding cheques or deposits in transit, both of which are legitimate. The test is whether every part of the difference can be named.
It is an entry posted to force a reconciliation to balance. Occasionally justified for a small known item. If one appears every month, somebody has been papering over a problem.
For a small trade business with a few accounts, well under an hour once current. The work is in staying current rather than catching up.
Worth chasing. Either it was lost, never received, or recorded twice. Carrying it forward indefinitely makes every future reconciliation harder to read.
It matters for how the reconciliation is run. Most banks will change your cycle date on request, which removes the problem permanently.
No. We do bookkeeping, job costing, payroll support and the reporting around them. Sales tax filings are not something we take on.
The free Books Health Check takes fifteen minutes and answers what the articles can't: where your books stand.
Get my free Books Health CheckFlat-fee bookkeeping for small businesses in these cities and everywhere between.
