What Is Bank Reconciliation?
Bank reconciliation matches your QBO records to your bank statement line by line. Here's how your bookkeeper does it monthly, and what to do when something doesn't match.
Bank reconciliation is the process of matching the transactions in your books against your actual bank statement — every deposit, every payment, every fee, line by line — to confirm they agree. If your QBO balance and your bank statement balance don't match at the end of the month, something is off in your records. Reconciliation is how you find and fix it.
Your NCO bookkeeping team does this monthly for every account. This article explains what it is, why it matters, and what happens when something doesn't line up.
What You'll Need
- Access to QuickBooks Online
- Your monthly bank statement (downloaded from your bank's online portal or received by mail)
Normal Procedure
- Pull your bank statement. Get the statement for the account you're reconciling — note the statement ending date and the ending balance.
- In QBO, go to Bookkeeping > Reconcile (or Accounting > Reconcile depending on your QBO version).
- Select the account you want to reconcile.
- Enter the statement ending date and the ending balance from your bank statement. Click Start reconciling.
- QBO will show you all transactions in your books for that period. Work through the list, checking off every transaction that appears on your bank statement.
- As you check off transactions, the Difference field at the top of the screen should count down toward zero. When it hits zero, your books and your bank statement agree.
- Click Finish now to complete the reconciliation.
A completed reconciliation means your books accurately reflect what actually happened in your bank account for that month.
Abnormal Procedures
Timing differences.
A check you wrote near the end of the month may not have cleared the bank before the statement date. These transactions show in QBO but not on the statement — that's normal. Leave them unchecked. They'll clear on next month's statement.
Duplicate entries.
If the same transaction appears twice in QBO, your difference will be off by exactly that amount. Check the For Review tab for any transactions that may have been added manually and then also pulled in via the bank feed. Delete the duplicate.
Bank errors.
Occasionally a bank posts a transaction in the wrong amount or posts a charge that doesn't belong to your account. Don't adjust your QBO records to match a bank error — contact your bank to dispute it. Once the bank corrects it, your reconciliation will clear.
Reconciliation discrepancy.
If you can't get the difference to zero and can't identify the cause, do not force-close the reconciliation with an unexplained adjustment. That hides the problem instead of solving it. Flag it to your NCO bookkeeper with the statement period and the discrepancy amount — they'll track it down.
FAQ
How often should bank reconciliation happen?
Monthly, every month, without exception. The longer you wait, the harder it is to track down errors. A transaction that happened three months ago is much harder to investigate than one that happened last week.
What's the difference between bank reconciliation and just having a bank feed?
A bank feed pulls transactions into QBO automatically. Reconciliation confirms that everything that should be in QBO is there, nothing extra has been added, and the ending balance matches your actual bank balance. The feed handles data entry. Reconciliation is the quality check.
What if a transaction is on the bank statement but not in QBO?
It needs to be added to your books. Common causes: a cash expense that was never entered, a fee your bookkeeper missed, or a transaction that didn't come through the feed. Your bookkeeper will enter it and categorize it correctly.
What if a transaction is in QBO but not on the bank statement?
It might be a timing difference (hasn't cleared yet), a duplicate, or an error. Don't delete it without investigating — if it's a real transaction that just hasn't cleared, deleting it will create a problem next month.
Can I reconcile if my bank feed has a gap?
Yes, but you'll need to manually enter any missing transactions first. Download your bank statement, compare it to what's in QBO, and add anything that's missing before starting the reconciliation.