Reconciliation basics

We know the word 'reconcile' sounds super scary and like, “Who do you think we are, the bookkeeping Master Chefs?” but don’t worry. Reconciliation isn’t as scary as it sounds. 

Reconciliation is a process where you make sure your bookkeeping matches what’s in your bank. You review the transactions in your bookkeeping system and cross-reference them with your bank statement. 

Reconciliation is a system of checks and balances for your bookkeeping. If you’re worried about screwing up your bookkeeping, then reconciliation is going to quell some of those fears. It should be part of your monthly bookkeeping routine and you’ll reconcile your bank and credit card accounts once a month. 

If we still haven’t convinced you of the merits of reconciliation- we don’t blame you. With a word as boring as reconcile, what good could it possible do for your business? Well, it...

  • Verifies that your books are accurate and that there are no mistakes. 
  • Confirms that there are no missing or duplicate transactions.
  • Ensures you can trust your numbers, like the balances in your QuickBooks register, totals on your reports, and, most importantly, what you report for your taxes. 
  • Catches errors before they spiral out of control into bookkeeping armageddon. 

Before you start reconciling with your bad self, there are a few things you need to gather: 

  • Digital or physical bank statements: The statements must show the opening and closing balances. It’s easier to start with a physical statement so you can check off the cleared transactions. 
  • Ruler: This helps you go line by line through statements without skipping transactions and losing your place (or your cool). 
  • Pen: To check off cleared transactions. 
  • Highlighter: To highlight missing transactions or transactions you need to investigate further. 

Reconciling your accounts in QuickBooks Online 

Instructions:

  1. Make sure all of your transactions have been added to your register. If there are transaction in the Bank Review window, then they won’t show up when you are reconciling. 
  2. Open the reconciliation window by going to register and pressing the Reconcile button or go to Gear-> Tools -> Reconcile.
  3. Choose the bank or credit card account you want to reconcile.
  4. Get out the statement for the month you are reconciling and find your opening and closing balance. 
  5. Make sure your opening balance on statement matches your beginning balance in QuickBooks Online. 
  6. Enter the ending balance from the statement and the ending statement date. 
  7. Match the transactions in the reconcile window to your bank statement.
    - Put a checkmark next to every transaction in the reconcile window that matches
      your bank statement.
    - Put a checkmark next to corresponding transactions on your bank statements.
    - Do this for every transaction on your statement until the difference is Zero.
    - Highlight any transactions that are missing or need to be adjusted.
    - If you are missing transactions, enter them in manually.
    - If the amounts are wrong, edit them to match the statement.
    - Press Reconcile. 

Troubleshooting

Not gonna lie- sometimes something goes wrong in a reconciliation and you can’t get the difference to be zero. And no, it’s not because you suck at money. It happens to the best of us and just takes a little bit of patience and troubleshooting. Here are a some tips for troubleshooting a reconciliation:

Check that the opening balance matches statement

Sometime QuickBooks Online forces an opening balance that’s incorrect. If this is the case, contact the Hyke bookkeeping team and we’ll help you adjust it. 

The other reason the opening balance might be off is if you deleted a previously reconciled transaction. If this is the case, contact your Hyke bookkeeping team and let us know what transaction you deleted and from which account, so we can help you fix it. 

Check that the closing balance matches the statement

A simple typo could be the culprit for why your reconciliation is off. Check that your closing balance in QuickBooks Online matches what’s listed on the bank statement. Typos, missing digits, and reversed digits can all lead to reconciliation mayhem. 

Check that the closing date matches the statement

QuickBooks Online will only show transactions in the statement window. If your closing date is off by a day, you will be missing transactions to reconcile. 

Look for a transaction that equal the discrepancy 

Sometimes a transaction happens on the same day as the statement closing date but AFTER the bank closes out for the month. That means it won’t appear on the statement.  For example, a transaction dated 6/30 may not be clear the bank until 7/1. It won’t show up on a June statement but will show up as a June transaction. 

If there’s a transaction that equals the discrepancy, it likey needs to be unchecked because it hasn’t cleared in the statement window. 

Uncheck all and re-reconcile

If all else fails, uncheck everything and do your reconciliation again. It’s helpful to walk away for a few minutes so you aren’t tempted to throw your computer out the window. Yes, it’s painful to erase all the hard work you’ve just done, but usually a fresh perspective is all you need to get your reconciliation to balance. 

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