What Do You Need to Reconcile a Statement?

What do you need to reconcile a statement in the UK? Bank reconciliation is a cornerstone for the success of a business or personal financial growth. If your bank statement matches the record you have and the total balance matches, you are doing great in your financial setup. Otherwise, this reconciliation statement will help you pinpoint the core problem that is causing you setbacks in business or financial losses. These bank reconciliation statements are generated periodically, mainly on a weekly or monthly basis. In this guide, we will focus on what do you need to reconcile a statement in the UK along with other crucial factors. Let us dig deep to know more.

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What Do You Need to Reconcile a Statement in the UK?

A bank reconciliation statement is a financial document that collates an individual’s or organisation’s cash amount with the bank statement. This document helps keep track of cash spent and points out any illegal transactions or fraudulent activities.

What are the Reconciliation Statement Preparation Steps?

The steps listed below are followed for the generation of a reconciliation statement:

1- Match the deposits

After you receive your bank statement on a weekly or monthly basis, the first thing you must do is compare your bank statement with the record of the issued cheque list that you have. Match each amount of transaction with the amount mentioned on the issued cheque. Mark them clear one by one. At the end, compare the amount that you have in your account according to the bank statement with the amount you estimated to be left. Compare any amount that is not mentioned in both bank statements and issued cheques. That will be the main fault point.

2- Adjustments in bank statements

Consult the accounting register to adjust the bank statements. Add the “in transit” amount shown in the accounting register to the total amount shown on the bank statement. This is the amount that is added to the business record but not added to the bank record yet. The next checkpoint is to clear all outstanding cheques. These are the issued cheques that are mentioned in the accounting register but are yet to be cleared by the bank.

In this scenario, you must adjust the bank statement. Human error is always possible. After clearing all cheques and transit amounts, don’t forget to look for human error. There may be an incorrect amount written in the bank statement or account register that needs correction. The errors can be:

• Omitting a transaction amount
• Entering incorrect amount

3- Adjustments in cash account

Adjustments in the cash account are necessary. These are done to compare the amount after deducting fees and taxes imposed by the bank. The extra amounts can be pointed to as service charges, interest rates, overdraft fees, NSF checks, and accounting errors. This will adjust the amount, either decreased or increased.

4- Compare the balances

This is the final step in the reconciliation statement. If the final balance on the bank statement and accounts register is the same, all is well. Your bank reconciliation statement is good to go. If the final balances don’t match, retract all the transactions to pinpoint any errors and avoid future miscalculations.

Visit our more detailed guide on what is bank reconciliation, we have covered in-depth knowledge of bank reconciliation over there.

The Bottom Line

In conclusion, to understand what do you need to reconcile a statement, the bank reconciliation statement is important for a company or small business’s growth in the UK. This helps to quantify payment errors and miscalculations and rectify human errors. However, in today’s digital era, there are a lot of software and digital tools available for preparing and maintaining the company’s reconciliation statement, ready and updated all the time with a minimum chance of error. This helps the company to effectively manage the flow of capital and also helps to reconsider business strategies. These software programs, though much more effective, still need a regular input of data to maintain, calculate, and update the reconciliation statement. You can also take help from our professionals to have a better experience.