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.
Reconciliation is one of the most important bookkeeping processes because it verifies the accuracy of your financial records. At its core, reconciliation means comparing your records to an independent source and investigating any differences. Bank reconciliation (comparing your books to bank statements) is the most common type, but other reconciliations include: AR reconciliation (comparing the subsidiary ledger to the general ledger and to customer statements), AP reconciliation (comparing your records to supplier statements), inventory reconciliation (comparing book records to physical count), payroll reconciliation (comparing payroll records to bank payments and tax filings) and intercompany reconciliation (comparing transactions between related entities). Regular reconciliation catches errors, identifies fraud, ensures completeness and maintains the integrity of your financial data. SortBooks speeds up the most time-consuming part of reconciliation by showing which bank transactions match invoices and bills, so you can reconcile them in Xero in a click.
SortBooks helps with the bookkeeping behind 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 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.
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.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
Accounts payable (AP) represents the money your business owes to suppliers and vendors for goods or services received but not yet paid for. It is a current liability on your balance sheet.
An audit trail is a chronological record of all financial transactions and changes made in your accounting system. It provides a verifiable history that supports the integrity of your financial data.
Internal controls are processes and procedures designed to safeguard business assets, ensure accurate financial reporting and prevent fraud or errors.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.