Your cash book balance and your bank statement balance rarely match on any given day. A Bank Reconciliation Statement (BRS) explains the differences and confirms both records are correct.
This guide explains why balances differ and how to reconcile them.
What is a bank reconciliation statement?
A BRS lists the reasons the cash book and bank statement differ — such as cheques issued but not yet cleared, deposits in transit, bank charges and direct credits — and reconciles the two balances.
Regular reconciliation catches errors and fraud early.
Common reasons for differences
- Cheques issued but not yet presented for payment
- Deposits recorded but not yet credited by the bank
- Bank charges and interest not yet recorded in the books
- Direct debits/credits made by the bank
Frequently asked questions
How often should I do a bank reconciliation?
Ideally monthly, so discrepancies, errors or fraud are caught quickly.
What causes a cash book and bank balance to differ?
Timing differences like uncleared cheques and deposits in transit, plus unrecorded bank charges or direct credits.