Balancing the Books: Bank vs. Cashbook

26 May 2014

You will often find that, at any given date, the bank balance according to your cashbook is different to the balance on your bank statement. This is primarily due to the time delay between entering the transaction in the cashbook and the time taken to clear the bank – usually 2-3 days depending on the nature of the transaction, i.e. cheque, direct debit, etc. It could also be down to the date on which a supplier banks your cheque, as this may not be immediate (if at all!).

It would be beneficial for your business to carry out a quick reconciliation of your cashbook and bank account, at the end of each month or quarter (for example), to determine if they agree. If any discrepancies have arisen, you may need to investigate these further. This will ensure that your cashbooks are always accurate, making account preparation easier and less time consuming.

Please see the example below:

Cashbook Reconciliation                                                                                                                                                                                 

Balance at beginning of period


Add: Total cashbook bankings


Less: Total cashbook payments



Balance at end of period


Bank Reconciliation                                                                                                                 

Balance on bank statement at end of period


Add: Outstanding bankings


Less: Outstanding cheques (Issued before the end of the month, but not yet presented to bank)
Cheque No:                   Amount
   002012                      60.00
   002014                      38.00
   002015                      12.00
   002018                      79.00


Balance at end of period


If the above reconciliations have been completed and there is a discrepancy between the two balances, you may need to examine the following:

  1. Addition errors
  2. Incorrect figures entered, e.g. reversal of numbers
  3. Direct debits or standing order payments not recorded
  4. Bankings or giro credits not recorded
  5. Any outstanding cheques from the previous period
  6. Cheques not recorded
  7. Duplicate bankings or payments

Here at Green and Co we offer assistance in all aspects of bookkeeping. For further help or guidance please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Salvatore Vuono at


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