Performing a Bank Reconciliation

Last Updated: Sep 25, 2015 02:01AM PDT

Learn how to perform a bank reconciliation. This article will cover:

Why perform a reconciliation of your bank and credit card accounts? To verify that you’ve correctly accounted for all the money going in and out of them.

A bank reconciliation is the process of matching transactions in your bank statement (bank statement transactions) to those in your accounting software (entered transactions). Traditionally this was done using a physical bank statement you’d get in the mail once a month. Nowadays, a bank feed can be set up to import your bank transactions into your accounting software on a daily basis.

Importing Your Bank / Credit Card Transactions

So how do you import bank or credit card transactions? There are two options:

Option 1 - Bank Feed

The easiest option for importing bank transactions is by setting up a bank feed. This is where Kashoo talks to your bank on a daily basis behind the scenes, bringing in the latest transactions from your bank.

Option 2 - File Upload

You’re also able to upload a file. If you have a lot of historical bank transactions to import, you may need to upload a file as the maximum amount of data a bank feed can usually import is 30 to 90 days.

We recommend uploading an OFX (Microsoft Money), QBO (QuickBooks), or QFX (Quicken) file downloaded from your online banking.

Some banks may not provide the file formats listed above. If this is the case for you, then Kashoo can also import CSV, Excel, or QIF files.

Note: If you're unable to import bank transactions, you can still perform a reconciliation. Please go to Performing a Traditional Bank Reconciliation to learn how.

Reconciling Imported Bank Statement Transactions

Once you've either set up a bank feed or uploaded your bank transactions, this is how you perform a reconciliation. If your bank transactions haven’t been imported, please do so.

Assuming that your bank statement transactions are imported:

  1. Go to the Banking page.

  2. Select the Account you want to reconcile and the Statement Date, which is the date that you want to reconcile your books up until. If you have many months of transactions to reconcile, we recommend only reconciling one month at a time.

By selecting the Account and Statement Date you'll see your transactions appear below.

The transactions are divided into two sections:

  1. The top section contains transactions found in your bank statement. These contain Imported Bank Statement Transactions
  2. The bottom section contains transactions entered into Kashoo. These contain Entered Transactions.

Your goal is to use the Imported Bank Statement Transactions in the top to either create new transactions, or match them to Entered Transactions.

Accepting a Match

If there’s a potential match between the Bank Statement Transactions and the Entered Transactions, you’ll see a suggested match. To accept the match, you simply check off the box.

If there’s no match found you’ll have the chance to add or remove a transaction.

Adding an Expense

By clicking on Add Expense, you'll be able to fill out the Vendor, Account fields and add the transaction. If you have Sales Taxes and a Memo to add, you can do that if you like, but it's not necessary to choose those fields.

Adding Income

By clicking on Add Income, you'll be able to fill out the Customer, Account fields and add the transaction. If you have Sales Taxes and a Memo to add, you can do that if you like, but it's not necessary to choose those fields.

Adding a Transfer

By clicking on Add Transfer, you only need to choose the Destination Account to transfer the funds with. You do have the option to add a Description and Currency, but it's not necessary.

Removing a Transaction

If you ever happen to end up with a duplicate transaction in your list of Bank Statement Transactions, removing it is as simple as clicking on the Remove from Bank Statement checkbox.

Saving the Reconciliation

When all your bank statement transactions are matched to your entered transactions, you're ready to save the reconciliation. To do so, scroll down to the bottom of the page and click on Save.

If you clear the Account and Statement Date you can see all your saved reconciliations.

Performing a Traditional Bank Reconciliation

If you won't be importing bank statement transactions, you can still perform a bank reconciliation the traditional way. To do so:

  1. Choose your Account and Statement Date.

  2. Check off the boxes next to the entered transactions that match those found on your bank statement.

  3. Once you've verified that the Closing Balance matches the one found in your bank statement, click on Save.

Bank Reconciliation Tips and Tricks

We’ve finished going over the basics of performing a bank reconciliation. You may want to check out our article that provides an in-depth look into reconciliations, some tips and tricks, and teaches you how to troubleshoot common reconciliation problems:

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