Bank reconciliation is the part of the close everyone knows how to do — until it won’t reconcile. Then it becomes the part that quietly eats an afternoon. This guide gives you a repeatable path for the exception, not just the happy case.
The free month-end close checklist includes this bank reconciliation decision tree, fully worked.
The routine reconciliation
Pull the bank statement for the period (the statement, not just the live feed — they drift), and match every ledger entry to it. If everything matches, you’re done: record and sign off.
The exception: unmatched items
The moment there’s an unmatched item — on either side, in the ledger but not the bank, or in the bank but not the ledger — the process forks. Here’s the tree:
- Unmatched items? → No — reconciliation agrees, sign off.
- Yes → above your threshold? Your threshold is firm policy or materiality-based. Below → note as a reconciling item and carry; sign off. Above → investigate.
- Investigate the cause → what kind of difference is it?
- Timing (e.g. an uncleared payment) → post an accrual or note the timing item; sign off.
- Error or missing record → escalate to the reviewing partner, because a correction needs review before the period locks.
Notice the rule: every path ends in resolved or escalate. No dead ends. That’s what makes the reconciliation runnable by a junior — the judgement is written into the flow, not held in someone’s head.
The same shape works for every control account
This isn’t only a bank-reconciliation pattern. The same match → threshold → cause → treat/escalate logic applies to debtors, creditors, VAT, PAYE/NIC and intercompany. Build it once and reuse it across the close — which is exactly what the Month-End Close System does, and what the PathPilot import turns into a live, reusable workflow.
For where reconciliation sits in the wider close, see the month-end close process guide.