What a bank reconciliation is
You compare every line on the bank statement with the entries in the bank account in the ledger. Each statement line should match an entry, such as a customer payment, a supplier payment or a bank fee. When every line is matched and every difference is explained, the closing balance in the books agrees with the statement.
The steps
- Get the full statement for the month, for every bank and card account.
- Check that the opening balance on the statement agrees with the balance in the books at the end of last month.
- Match each money-in line to the customer invoice or receipt it pays.
- Match each money-out line to the supplier bill, payroll payment or other entry it settles.
- Record the items that only appear on the statement, such as bank charges, interest and card fees.
- List the timing differences, such as payments you have recorded that the bank has not yet processed.
- Check that the books, adjusted for timing differences, agree with the statement's closing balance, then sign off the month.
The usual differences
| Difference | What to do |
|---|---|
| Bank charges and interest | Record them from the statement. |
| Card payouts arrive net of fees | Record the gross sales and the card fees, so the net agrees with the payout. |
| Foreign card charges | Record the bill at its rate, plus the exchange difference and any bank fee. |
| One payment for several invoices | Split the payment across the invoices it pays. |
| An entry recorded twice | Remove the duplicate. |
| Payments not yet cleared | Leave them as timing differences. They should clear next month. |
Cyprus cases to watch
- JCC and other card payouts cover many sales at once and arrive net of fees.
- A single Social Insurance payment covers several payroll liabilities, such as Social Insurance, GESY and the other funds.
- Foreign subscriptions, paid by card, carry an exchange difference and often a bank fee.
If you cannot find a difference
Check whether the difference equals a single statement line, whether it is twice an amount (a sign error), or whether it divides by nine (two digits swapped). Then compare dates near the start and end of the month, where most timing differences sit.
This guide is general information, checked against official sources in October 2026. It is not tax advice. Rules change, so confirm with the Tax Department or your adviser before you act.
Let DecaBooks do this for you
Bank reconciliationUpload any bank statement and every line is matched, with a reason.