What is Bank Reconciliation BRS?How to prepare it?

Bank reconciliation statement

There are times when your business entity deposits a cheque or draws a bill of exchange discounted with the bank. However, such deposited cheques or discounted bills of exchange drawn by your business entity get dishonored on the date of maturity. At times, you might give standing instructions to your bank to make some payments regularly on specific days to the third parties. For instance, insurance premiums, telephone bills, rent, sales taxes, etc are directly paid by your bank on your behalf and debited to your account. Not producing a reconciliation report when one is needed will also make it more time consuming to produce future reconciliations, due to it being harder to unpick the differences. However, in reality, there are often still discrepancies due to timing issues related to transactions (i.e. cash in transit) or errors from external providers (i.e. omitted transactions).

  • However, businesses with a high transaction volume or increased fraud risk may need to reconcile more frequently, sometimes even daily.
  • A bank reconciliation statement should be completed monthly but can even be done weekly if your company processes a large number of transactions.
  • Depending on how you choose to receive notifications from your bank, you may receive email or text alerts for successful deposits into your account.
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  • In accounting, a company’s cash includes the money in its checking account(s).

The first step is to obtain a detailed statement from the bank, which includes information about checks cleared and rejected by the bank, transaction charges, and bank fees. It is helpful for a company to have a separate general ledger Cash account for each of its checking accounts. For instance, a company will have one Cash account for its main checking account, a second Cash account for its payroll checking account, and so on.

Step 1. Choose Your Method for Reconciliation

There’s nothing harmful about outstanding checks/withdrawals or outstanding deposits/receipts, so long as you keep track of them. More specifically, you’re looking to see if the “ending balance” of these two accounts are the same over a particular period (say, for the month of February). When the amounts aren’t equal, you’ll need to verify the numbers, fix any errors, and repeat the reconciliation process to find out where the discrepancy is. After you have compared the deposits and withdrawals, determine any missing transactions.

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Missed reconciliations

Financial statements show the health of a company or entity for a specific period or point in time. Accurate financial statements allow investors to make informed decisions. The statements give companies clear pictures of their cash flows, which can help with organizational planning and making critical business decisions. In this case, the reconciliation includes the deposits, withdrawals, and other activities affecting a bank account for a specific period. Any discrepancies lead to making necessary adjustments or corrections. To begin with, please take note that though the client may not have access to certain older bank accounts, the information about them will still be reflected on the balance sheet.

Bank reconciliation statement

HighRadius offers autonomous cash management software that helps businesses optimize cash flow management and reduce reconciliation delays. With HighRadius, you can enjoy continuous global cash visibility, updated balances by entity, bank, and currency, and rolling short-term cash position keeping. Automation can solve the problem of time-consuming manual reconciliation and reduce errors. Cross-checking the bank statement and balance sheet can be done without human intervention using software tools. By avoiding these common errors, businesses can ensure the accuracy of their financial records, make informed business decisions, and reduce the risk of financial issues.

Cheques Deposited or Bills Discounted Dishonored

The easiest way to check for this is to print a check register for the month and compare it to the checks that have cleared the bank. Any checks that have been issued that haven’t cleared the bank must be accounted for under your bank balance column. Search the bank statement for any interest your account earned during the month, then add it to your reconciliation bank reconciliation statement. Also, deduct any penalties or fees the bank assessed that your ledger doesn’t list. The deposit could have been received after the cutoff date for the monthly statement release. Depending on how you choose to receive notifications from your bank, you may receive email or text alerts for successful deposits into your account.


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