Bank Reconciliation: The 30-Minute Task That Could Save Your Business

You check your bank balance. You check your QuickBooks. The numbers don’t match. That cold feeling hits. Where did the money go?

I’ve worked with dozens of Houston business owners who hit this moment way too late. By the time they notice the discrepancy, it’s been sitting there for months. What started as a $50 gap turned into $5,000 or worse. Untangling it becomes a nightmare that nobody wanted.

This is what happens when you skip bank reconciliation.

The $14,000 Lesson

I had a retail client in the Galleria area who discovered something nasty. An employee had been writing small checks to themselves. Not huge amounts. $200 here, $400 there. Small enough to fly under the radar during daily operations.

After eight months, the damage added up to $14,000.

If this owner had done monthly reconciliation, I would have caught it in month one. A 30-minute review would have spotted a check written to an unfamiliar name. Instead, the theft kept going until the year-end audit blew it wide open.

Reconciliation isn’t exciting. It isn’t strategic. But ignoring it is like leaving your front door unlocked and hoping nobody walks through.

What Bank Reconciliation Actually Does

Think of it as a translation exercise. Your bank statement says one thing. Your books say another. Reconciliation makes sure they’re telling the same story about your money.

Differences happen naturally:

• A check you wrote last week hasn’t cleared yet
• A deposit you mailed is still in the bank’s pipeline
• The bank charged a fee you didn’t record
• A customer’s check bounced
• Someone withdrew cash you didn’t expect

Reconciliation tracks down every difference and explains every dollar. Your book balance should match your bank balance. Any gap that doesn’t add up means something needs investigating.

I don’t care if it’s $1 or $100. I find it.

The 7-Step Process

Step 1: Gather Your Documents

Pull together what you need:

• Your bank statement for the month
• Your accounting records, QuickBooks file, or whatever software you’re using
• Last month’s reconciliation, so you can verify the beginning balance matches

Step 2: Verify Beginning Balances

Your book’s beginning balance should match last month’s ending balance after reconciliation. If it doesn’t, stop here. Something got changed that shouldn’t have been touched.

Step 3: Match Transactions

Go line by line through the bank statement. Check off everything:

• Deposits
• Checks that cleared
• Transfers you made
• Bank fees
• Any interest the bank paid you
• Automatic payments

Mark anything that shows up only on one side or has the wrong amount. Those are your red flags.

Step 4: Identify Outstanding Items

Outstanding checks are checks you wrote and recorded in your books but haven’t cleared the bank yet. They reduce your bank balance but are already in your records.

Deposits in transit are deposits you recorded and mailed to the bank but it hasn’t processed them yet.

These aren’t errors. They’re just timing. They clear in the next few days or weeks.

Step 5: Record Missing Transactions

Bank fees. Interest. Automatic payments you forgot to write down. Checks that bounced. Direct deposits you didn’t enter. These are on the bank statement but not in your books.

Get them into your records now.

Step 6: Investigate Discrepancies

When amounts don’t match or you see transactions you don’t recognize:

• Verify the amount is correct
• Check for numbers that got reversed, like recording $500 when it was $5,000
• Look for the same transaction entered twice
• Figure out what unknown transactions are

Don’t guess. Verify every single one.

Step 7: Complete the Reconciliation

Bank Statement Balance Add deposits in transit Subtract outstanding checks Equals your adjusted bank balance

Your Book Balance Add interest or deposits you didn’t record yet Subtract bank fees you didn’t record yet Add or subtract any errors you found Equals your adjusted book balance

These two numbers must be the same. If they don’t match, you still have a discrepancy that needs fixing.

A Real Example

Here’s what it looks like when you actually do it.

Starting Point:

• Bank statement says: $45,280.00
• Your books say: $47,125.00
• Difference: $1,845.00

Outstanding Checks and Deposits:

Item	Amount
Check #1042 hasn’t cleared yet	-$2,400.00
Check #1045 hasn’t cleared yet	-$875.00
Deposit you sent on 1/31 still pending	+$1,500.00

Bank Math: $45,280.00 + $1,500.00 - $2,400.00 - $875.00 = $43,505.00

Items You Need to Record in Your Books:

Item	Amount
Bank service fee	-$45.00
Customer check that bounced	-$3,500.00
Interest the bank paid	+$25.00
Data entry error you found	-$100.00

Your Book Math: $47,125.00 - $45.00 - $3,500.00 + $25.00 - $100.00 = $43,505.00

Final Result: Both numbers equal $43,505.00. Reconciliation complete.

Why Monthly Matters

A reversed number, like recording $1,250 as $1,520, jumps out when you’re looking at 30 transactions. But hunt for it in a year’s worth of activity. Good luck finding it.

Do it monthly and you catch errors while they’re fresh in your mind. You spot unauthorized transactions before they pile up into something serious. Your financial statements stay clean.

Here’s the best part: it takes 30 minutes when you do it every month. Skip it for six months and you’re looking at three or four hours of work to untangle the mess.

Problems That Pile Up

Checks that never clear. A check outstanding for 90 days or more isn’t clearing. Follow it up or void it and reissue a new one.

Missing documentation. Transactions you see on the bank statement but have no receipt or record for. That creates a nightmare when the IRS wants to know where the money went.

Mixing personal and business. I see this constantly with owners around the Westheimer and Uptown area. You run business money and personal money through the same account and reconciliation becomes a disaster. Your liability protection disappears too.

Duplicate entries. Same transaction recorded twice because you entered it and QuickBooks auto-imported it. Everything falls apart.

Ignoring small differences. A $5 gap might be covering something bigger. I never leave a reconciliation unbalanced, not even for $5. That small unexplained amount this month becomes $50 unexplained by next quarter.

Warning Signs You Need Help

• You haven’t reconciled in three or more months
• You keep finding unexplained differences
• Transactions show up that you don’t remember making
• Your book balance doesn’t feel real anymore
• You’re getting ready for an audit or applying for a loan

If your last reconciliation was last year, you’re already behind. Problems exist. The only question is how many have piled up while you weren’t looking.

The Bottom Line

Bank reconciliation doesn’t generate revenue or bring in new clients. But skipping it exposes your business to errors, fraud, and financial statements that don’t tell you the truth about your money.

Thirty minutes a month. That’s what stands between you and a $14,000 disaster.

We do monthly bank reconciliations for all our bookkeeping clients here at EZQ Group. We catch the discrepancies, record what’s missing, and keep your records clean so you can actually trust your numbers.

If your books are a mess and you need help, contact us and let’s talk about what we can do for your bookkeeping.