Bank reconciliation is the process of matching your accounting records to your bank statement to ensure they agree. It identifies discrepancies, errors and missing transactions.
Bank reconciliation is one of the most fundamental and important bookkeeping tasks. It involves comparing every transaction in your accounting software with the corresponding transaction on your bank statement to ensure they match. Differences can arise from timing (cheques not yet cleared), errors (wrong amounts entered), missing transactions (bank fees not recorded) or fraud (unauthorised transactions). Regular bank reconciliation - ideally daily or weekly - ensures your books are accurate and catches problems early. The process involves: starting with your bank statement balance, adding deposits not yet cleared, subtracting payments not yet cleared and arriving at a balance that matches your accounting software. Any remaining difference indicates an error that needs investigation. In Xero, bank reconciliation is streamlined through bank feeds and matching rules. SortBooks helps further by showing which bank transactions match your invoices and bills, so you can reconcile them in Xero in a click.
SortBooks helps with the bookkeeping behind bank reconciliation by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing bank reconciliation by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
A bank feed is an automatic, real-time connection between your bank account and your accounting software that imports transactions directly, eliminating manual data entry.
Reconciliation is the process of comparing two sets of records to ensure they agree. Common types include bank reconciliation, accounts receivable reconciliation and intercompany reconciliation.
A bank statement is a periodic record from your bank showing all transactions, deposits, withdrawals and the running balance for your account over a specific period.
A cash book is a financial record that tracks all cash receipts and payments in and out of a business. In modern bookkeeping, it is typically maintained through your accounting software's bank register.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.