What's a reconciliation?

Reconciling is an important step in managing your business. Let’s go over what it is, what you should do before you reconcile, and then how to reconcile in QuickBooks. When you reconcile, you make sure that the records that you keep in QuickBooks match your bank and credit card statements. First, make sure that you have accurate records in QuickBooks. Record all your money coming in for the month, and all your money going out for the month in QuickBooks. Connecting your bank and credit card accounts to QuickBooks and then categorising all those transactions is the fastest and best way to keep your books accurate. If you want help learning how to connect to Online Banking and how to categorise your transactions, then there are videos at the end of this one that can teach you how. It’s best to do this process every month after you get your statement from the bank. You’ll need your statement to match the bank’s records to QuickBooks, so have it handy. There are two different reconciliation experiences in QuickBooks… Our classic workflow And an AI-powered version. Check our plans & pricing page to see which features are included in your plan. Let’s start with the classic workflow. If you have the AI-powered reconciliation experience, you can skip ahead to see that version. Once you’re ready to reconcile, go to settings… then reconcile. Choose the bank or credit card account you want to reconcile. Enter in the ending balance and the ending date from the bank or credit card statement you received. Double check that your opening balance matches your statement. If everything looks good, select Start reconciling. Now take your bank statement and compare that to the information in QuickBooks, especially the dates and amounts. Find an item in your statement, and then find it here. If they match, then put a tick next to it. If you see an item in your reconcile list that is not on your statement, then don’t check it. If you have your account connected to QuickBooks, you’ll see many transactions with a check next to them. These items have already been reconciled when QuickBooks downloaded the item, and you matched it in QuickBooks when you reviewed your transaction feed. So, no need to worry about these. Once you verify all items from your statement in QuickBooks, you should have a zero balance. That tells you that there is zero difference between what’s in QuickBooks and what’s on the bank statement. If you have a difference, then you’ll see the amount here, and you’ll need to figure out why. First, select Edit info and verify that your beginning balance, ending balance, and ending date are all correct. If they are, go back and check any transactions that you manually entered into QuickBooks, so any item that didn’t already have a tick next to it when you started, and see if you can find the error. You can select any item for more details, and if you need to make a change, you can enter it and save. If you cannot find the error, you can still choose to finish and accept the difference. QuickBooks will create a journal entry that adjusts your books by the amount of the difference. However, you should talk to your accountant before doing this. Usually, it’s best to resolve any differences in the reconciliation and to not perform this task. Once you’ve reached a difference of zero, select Finish now and then Done. You can look at a detailed history of your reconciliations at any time by clicking History by account. Now, let’s take a look at the AI-powered reconciliation experience. This method allows you to upload a bank statement and let QuickBooks automatically extract the data. Remember to connect your bank account, and record all your money coming in for the month, and all your money going out for the month in QuickBooks. Once you’ve done that, select settings, then reconcile. Choose the bank or credit card account you want to reconcile. Next, upload your bank statement, and extraction will begin. This process may take a few minutes, or longer if the statement needs further review. Previously uploaded statements will appear in the “View Statements” drawer, where you can also select which statement to use. You can only select statements that have the status of “Extraction completed”. You can delete, download, or preview your statements from here. Once extraction is complete, your statement ending balance and statement ending date are pre-populated. Double-check to make sure the numbers match. If everything looks good, select Start reconciling. But if you’re seeing an error that looks like this, watch this video to help you resolve it before reconciling. The reconciliation page shows what period of time you’re reconciling. Here, you’ll also see totals, like your statement beginning and ending balance, as well as the same info based on what you’ve entered in QuickBooks, and the differences between those numbers. If you need a little more viewing space for your transactions, collapse this menu at any time. Below, you see all the transactions you recorded for this account through the statement end date. The status column represents whether you need to review and take additional action on the transactions or not. Cleared means the transaction matches with the information extracted from your statement: the date, description, and amount. The tick indicates that the transaction should be reconciled on this statement. It’s also possible that multiple QuickBooks transactions equal one line on your bank statement - like a deposit connected to multiple customer payments. If you matched them in your Bank Transactions, you’ll see here how they’re matched in your books. The review status means you need to do something with the transaction before completing the reconciliation. For example, if you see a transaction in your books without a tick, and you see it on your statement, you can add a tick to mark it as ready for reconciliation Or maybe you need to categorise a transaction from online banking before you reconcile it. An explanation on the transaction will tell you what action you need to take. Or, you may have accidentally excluded an item in your bank transactions, but since it’s on your statement, it should be in your books. If you need to change the details of a transaction, select it, and choose Edit. Make sure any changes you make match what happened in the real world Once you verify all items from your statement in QuickBooks, you should have zero differences, meaning there is no difference between what's in QuickBooks and what's on the statement. If you have a difference, you’ll see how much the difference is here. Then you need to figure out why. Hover over the symbol to see an explanation. To start your investigation, select “edit info” to verify that your Beginning balance, ending balance, and ending date all match the statement. If they do, check any transactions that you manually entered into QuickBooks - and ensure there are no errors or duplicates. Select any item for more details, and if you need to make a change, enter it, and save. If you cannot find the error, you can still choose to finish and accept the difference. QuickBooks will create an adjusting entry in the amount of the difference. However, you should talk to your accountant before doing this. Usually, it's best to resolve any differences in the reconciliation. We’ve found the issue! This transaction is a duplicate, so we’ll uncheck it. Once you've reached a zero difference, select Finish now, and then Done. Now you can reconcile your accounts in QuickBooks. If you still have questions, try our free webinar on reconciling.