Blog Post
5 Common Bank Reconciliation Problems (and How to Solve Them)
There is no sinking feeling quite like finding a $0.05 variance that you cannot explain. Bank reconciliation should be straightforward, but in reality, it's often messy. Whether it is a typo, a missed fee, or a timing issue, small errors can derail your entire month-end close. Here are the 5 most common bank reconciliation problems and how to fix them fast.
1. Outstanding Checks
The Problem: You wrote a check to a vendor on the 28th, but they didn't cash it until the 3rd of the next month. Your GL shows the cash is gone, but the bank says it's still there.
The Solution: Do not adjust your GL. Instead, list this as a "deduction" on your reconciliation report. It is a timing difference, not an error.
2. Deposits in Transit
The Problem: You deposited cash on Friday afternoon, but the bank didn't process it until Monday.
The Solution: Similar to outstanding checks, this is a timing difference. Add it to the bank balance on your reconciliation sheet. If it doesn't clear within 2-3 business days, investigate immediately.
3. Bank Fees and Interest
The Problem: The bank charges a $15 service fee or pays $0.45 in interest. These transactions appear on the bank statement but were never entered into your accounting software.
The Solution: You must record these in your GL. Create a journal entry to debit "Bank Service Charges" and credit "Cash" (or vice versa for interest).
4. NSF Checks (Bounced Checks)
The Problem: A customer paid you $500, you recorded it, but the check bounced. The bank deducted the $500 back out of your account.
The Solution: You need to reverse the original payment in your books. Re-open the customer's invoice so your Accounts Receivable aging report reflects that they still owe you money.
5. Data Entry Errors (Transposition)
The Problem: You paid $540, but entered it as $450 in the system. The variance is $90.
The Solution: Look for variances that are divisible by 9. This is a classic sign of a transposition error (swapping two digits). Correct the entry in the GL to match the bank statement.
Solve These Problems Automatically
While knowing how to fix these manually is important, manual intervention is slow.
Reconwizz automates the detection of these errors. It automatically flags timing differences and suggests journal entries for bank fees, saving your team hours of detective work.