Module 9 · Lesson 1

Statement Reconciliation

10 min read

Statement Reconciliation

Statement reconciliation is the process of verifying that your app records match your bank statements. This ensures accuracy and catches any discrepancies.

Why Reconcile?

Reconciliation:
1. Ensures accuracy - Verifies your records match the bank
2. Catches errors - Finds missing or duplicate transactions
3. Builds confidence - When balances match, you know the system works
4. Required for trust - Accurate records are essential for budgeting

When to Reconcile

Reconcile:
- Monthly - When you receive bank statements
- After importing - After importing new transactions
- When balances don't match - If app balance ≠ bank balance
- Regularly - Make it a monthly habit

The Reconciliation Process

Step 1: Get Your Bank Statement

Obtain your most recent bank statement:
- Online banking - View or download statement (PDF or online view)
- Mail - Physical statement (if you receive them)
- Date range - Note the statement period (e.g., Jan 1-31)

Note: The app uses statement records for reconciliation. You can create statement records manually or import them. PDF import is not currently available in the user interface, but you can manually enter statement closing balances for reconciliation.

Step 2: Check Statement Closing Balance

Note the closing balance from your statement:
- This is the balance at the end of the statement period
- Use this as your reconciliation target

Step 3: Compare App Balance

Check your app's balance for the statement end date:
- Go to Accounts in app
- Select the account and view balance on statement end date
- Compare to statement closing balance

Try it now: If you have demo data, view your accounts and practice reconciling with the sample account balances.

Step 4: Identify Discrepancies

If balances don't match:
1. List all transactions from statement period
2. Compare to app transactions - Check each one
3. Find differences - Missing transactions, duplicates, wrong amounts
4. Investigate - Determine cause of discrepancy

Step 5: Resolve Discrepancies

Fix any issues found:
- Missing transactions - Import or add manually
- Duplicate transactions - Delete duplicates
- Wrong amounts - Correct transaction amounts
- Wrong dates - Adjust transaction dates

Step 6: Verify Match

After fixing issues:
1. Recalculate app balance
2. Compare to statement closing balance
3. If they match, reconciliation is complete!
4. If not, repeat steps 4-5

Common Reconciliation Issues

Issue: Missing Transactions

Problem: Bank statement shows transaction not in app

Solution:
1. Import missing transaction from CSV
2. Or add transaction manually
3. Verify amount and date match statement

Issue: Duplicate Transactions

Problem: Same transaction appears twice in app

Solution:
1. Identify duplicate transactions
2. Delete one of them
3. Verify balance recalculates correctly

Issue: Pending Transactions

Problem: Bank shows pending transaction, app doesn't

Solution:
- Option 1: Wait for transaction to clear, then reconcile
- Option 2: Add pending transaction manually with future date
- Option 3: Reconcile excluding pending transactions (note this)

Issue: Balance Off by Specific Amount

Problem: App balance differs from statement by exact amount

Solution:
1. Search transactions for that amount
2. Check if transaction is missing or duplicated
3. Verify opening balance is correct

Statement-Anchored Reconciliation

Our app uses statement-anchored reconciliation:

  1. Statement closing balance = source of truth
  2. Opening balance = previous statement's closing balance
  3. Transactions = all items from statement
  4. App balance = opening balance + transactions
  5. Match = app balance equals statement closing balance

This approach ensures accuracy because you're using bank statements as the authoritative source.

Best Practices

  1. Reconcile monthly - Make it a regular habit
  2. Use statement dates - Reconcile to statement period, not arbitrary dates
  3. Document discrepancies - Note any issues and how you resolved them
  4. Keep statements - Save statements for reference
  5. Verify regularly - Don't let discrepancies accumulate

Reconciliation Checklist

Use this checklist each month:

  • Received bank statement
  • Noted statement period (start and end dates)
  • Noted statement closing balance
  • Checked app balance for statement end date
  • Compared balances (app vs. statement)
  • Identified any discrepancies
  • Resolved discrepancies
  • Verified balances match
  • Updated opening balance if needed
  • Documented reconciliation

After Reconciliation

Once reconciled:
1. Update opening balance - Use statement closing balance as new opening balance
2. Mark as reconciled - Note date of reconciliation
3. File statement - Keep for records
4. Continue tracking - Import new transactions going forward

Key Takeaway: Statement reconciliation ensures your app records match your bank statements. Reconcile monthly by comparing app balance to statement closing balance, identifying and fixing discrepancies, and verifying they match. This builds confidence in your financial records.