Your business is booming. Money’s coming in, you’re reinvesting heavily, and expenses are flying out the door for growth. You feel successful—busy, important, profitable.
But then you look at your bank account and think, Wait, where did it all go? You made six figures this month, but somehow still feel broke. Sound familiar?
Here’s the thing nobody tells you about growing a business: the faster money moves, the easier it disappears. While you’re focused on the next sale, the next hire, and the next expansion, dollars are slipping through cracks you don’t even know exist.
Stop wondering where your money went and start tracking where it goes. Here’s how.
Step 1: Compare Your Deposits
First things first, make sure you’re on solid ground. The ending balance on your last bank statement should be the same as the starting balance on your new one.
Grab your bank statement and your internal records (like your accounting software or a spreadsheet) and look at each transaction. Check that the deposits in your records match those on the bank statement.
As you go, mark off any deposits that appear in both places. If you find a deposit in your records that’s missing from the bank statement, it’s likely a deposit in transit. This means the money is on its way to your account, so note it down to adjust your bank balance later.
If they don’t match: Stop and figure out why. A typo from the previous month’s ending balance is a common culprit!
Step 2: Adjust the Bank Statements
Now it’s time to adjust the bank’s records to account for any differences you just found.
- Deposits in Transit: These are funds you recorded, but the bank hasn’t yet. Add these to your bank statement balance.
- Outstanding Checks: Did you write a check that hasn’t been cashed yet? These are outstanding checks. Subtract them from your bank balance.
- Bank Errors: This is where you play detective! Look for any mistakes the bank might have made. If you find any, correct them by comparing both your records and the bank’s.
Step 3: Adjust Your Cash Account
Next, let’s update your records to make sure they’re perfect. Update your cash balance by adding any interest earned and subtracting fees or charges.
This could include:
- Bank fees: Service charges, overdraft fees, or late fees. Subtract these from your books.
- Interest earned: Any money the bank paid you on your balance. Add this to your books.
- NSF checks: Checks that didn’t clear due to insufficient funds. Subtract this from your books.
Step 4: Compare the Final Balances
This is the big moment! After making all of your adjustments, the balances in your records and the bank statement should match.
If they don’t, don’t panic! It happens. Just repeat the reconciliation process again to find the error. This is why having a clear, step-by-step process is so important—it makes finding mistakes a lot easier!
Tips for a Smoother Reconciliation
- Reconcile Regularly: While a monthly reconciliation is the standard, a high-volume business might benefit from reconciling weekly or even daily. The more often you do it, the fewer transactions you have to sort through, and the quicker it becomes. It also helps you spot fraud or errors almost instantly.
- Embrace Automation: If you’re still using a spreadsheet, consider using accounting software. Modern accounting tools can connect directly to your bank account, automatically importing transactions and matching them for you. This dramatically reduces manual work and the chance of human error.
- Look for Transposition Errors: If your balances are off by an amount that is divisible by 9 (e.g., $9, $18, $27), it’s often a sign of a transposition error, which is when two digits are accidentally swapped (like writing $32 instead of $23). This simple trick can save you a lot of time searching for a typo.
Now You’re in Control: Your Next Step
You did it. By following these simple steps, you’ve ensured your records and the bank statement are perfectly in sync. This isn’t just a tedious chore. It’s a powerful business habit that gives you peace of mind and complete control. Doing this regularly means you’ll spot problems instantly and make smarter decisions with confidence.
But what if you didn’t have to do it alone? As your business grows, so do your transactions—and so does the time spent on reconciliation. That’s where Gamut Ascent’s BaseOps Bookkeeping Services come in.
With BaseOps, you get more than just a reconciled account. You get a complete financial partnership. We’ll handle everything from the initial setup to the monthly categorization of every transaction. Along with monthly financial reports, a review of your books, and year-round support to answer any questions you have.
Let’s get your books on autopilot.