--- title: "What Is Bank Reconciliation? Definition and Steps" description: "What is bank reconciliation? A plain definition, why companies do it, the steps, who does it and how it differs from close terms." url: https://nexumautomations.com/glossary/bank-reconciliation updated: 2026-10-31 publisher: Nexum Automations, an AI consulting firm --- > Nexum Automations is an AI consulting firm that builds what it recommends. It finds where AI pays off in a company, builds it on the tools the team already uses and stays until it is live and working. Glossary # What is bank reconciliation? Explained A plain-words definition of bank reconciliation, why companies do it, the steps involved, who does the work and what changes with automation. Last reviewed October 30, 2026 Definition Bank reconciliation Bank reconciliation is the process of comparing a company's own cash records with its bank statement for the same period and explaining every difference. That is the bank reconciliation meaning in one line. **In short:** Match your books to the bank statement. Our data ## What buyers see in this search The first page of Google for "what is bank reconciliation", counted by type of result. | | Results | | ---------------------------------------------------- | ------------------------------- | | Articles by companies that sell a product or service | 7 of 8 | | Independent publishers and explainers | 1 of 8 | | Titles that answer this exact search | 7 of 8 | | Google features on the page | An AI Overview, People also ask | The 8 organic results on the first page of Google, United States, desktop, measured with DataForSEO on October 29, 2026\. Types only: no company or product is named. ## What bank reconciliation is and why it matters * Deposits in transit Recorded by you, not yet posted by the bank. * Outstanding checks Written by you, not yet cleared. * Bank fees Posted by the bank before you booked them. * NSF checks Customer checks that bounced. Your books say one thing about your cash. Your bank says another. The reconciliation finds out why. One accounting source calls it a control process that compares the entries in the general ledger with the bank statement. That is a solid bank reconciliation definition for a business reader. Companies do it to catch errors, duplicate payments and fraud early, and to keep the books trustworthy. Gaps between the two records usually have simple causes, listed below. ## The steps and how often it is done 1. Pull the records Get the bank statement and your cash ledger. 2. Match items Pair each ledger entry with a bank line. 3. List differences Note what is left unmatched. 4. Explain each one Find the cause of every gap. 5. Adjust the books Record fees, errors and corrections. 6. Confirm Both balances now agree. The flow is short. Most companies run it every month when the statement arrives. Busier ones do it weekly or daily. The full walk-through, with timing, lives in our guide to [automating bank reconciliation](https://nexumautomations.com/how-to/automate-bank-reconciliation). ## Who does it and how automation changes it Rules handle * Clean one-to-one matches * Repeat payees and amounts * First-pass sorting A person reviews * Odd or large amounts * Missing or duplicate items * Final sign-off Often a bookkeeping, accounting or auditing clerk does it. The U.S. Bureau of Labor Statistics counts about 1.5 million of these clerks in 2025. Their median pay for 2025 was $24.36 an hour. The agency lists reconciling differences among their duties. The same agency projects that employment for this group will decline 6% from 2025 to 2035\. Its outlook adds that software innovations have automated many tasks in these jobs. Automation splits the work. Rules handle the clean matches, and a person reviews the exceptions: the odd amount, the missing payee, the duplicate. For invoices and payments, see our [accounts payable automation](https://nexumautomations.com/solutions/accounts-payable-automation) work. ## How bank reconciliation differs from close terms Bank reconciliation is * A routine check on cash * Your books versus the bank * Done monthly or more often It is not * The bank statement itself * A full audit of the books * Limited to a year-end task Reconciliation is not the same as a bank statement. The statement is the bank's record. The reconciliation is your comparison of that record with yours. It also differs from an audit. An audit checks the whole set of books, often once a year and by an outside party. A reconciliation is a routine check on cash. Account reconciliation is the wider term. It covers cash, but also accounts such as payables and receivables in the [back office](https://nexumautomations.com/glossary/back-office). Bank reconciliation is the cash case. FAQ ## Bank reconciliation questions * ### What is a bank reconciliation? A bank reconciliation compares your cash records with the bank's statement for the same period and explains each difference. The goal is for both balances to agree after adjustments. * ### What is the purpose of a bank reconciliation statement? The statement lays out the match: bank balance, items still in transit, and corrections to your books. It shows why the two records differed and proves they now agree. * ### What are deposits in transit? Deposits in transit are amounts you recorded as received but the bank has not posted yet, such as a deposit made late on the last day of the period. * ### What are NSF checks? NSF checks are customer checks returned because the payer's account lacked enough funds. The bank reverses the deposit, so you must correct your books to match. * ### How often should a business reconcile its bank accounts? Monthly is the common rhythm, when the statement arrives. Companies with heavy transaction volume reconcile weekly or daily to spot problems sooner. --- Source: https://nexumautomations.com/glossary/bank-reconciliation Free AI diagnosis (30-minute call): https://nexumautomations.com/#book - Services: https://nexumautomations.com/services - Guides: https://nexumautomations.com/guides