Why balances differ
Your bank book and the bank statement record the same transactions, but not always on the same day. A bank reconciliation statement (BRS) explains the difference between the two closing balances at a date, item by item, so you know both records are right — and catch errors or fraud early.
The usual reconciling items are: cheques issued but not yet presented for payment; cheques or cash deposited but not yet credited by the bank; bank charges, interest and direct debits recorded by the bank but not yet in your books; direct credits such as NEFT receipts or interest that you haven't recorded; and cheques that were deposited but dishonoured.
How the template matches entries
You tick off each bank-book entry that appears on the statement (Y), and mark statement lines you haven't booked yet (N). Everything not ticked becomes the reconciling list — the template pulls those items into the BRS automatically, with a count if there are more than fit on the page. The Pro edition adds a match finder that points out statement lines with the same cheque number or amount.
The BRS then starts from the balance as per books, adds cheques issued but not presented, deducts deposits not yet credited, and adjusts for bank-only entries. The result should equal the balance as per bank statement, and the check cell turns ✔ when it does.
Fix your books, not just the statement
Items the bank has recorded but you haven't — bank charges, interest credited, direct debits for loan EMIs, GST on charges, NEFT receipts from customers — are not timing differences. They need journal entries in your books. After posting them, the only items left on the BRS should be genuine timing differences: cheques in transit and deposits in clearing.
Stale cheques
In India a cheque is valid for three months from the date written on it. A cheque you issued that has not been presented within three months is stale — the bank will not honour it. Leaving it on the BRS indefinitely overstates your payables-cleared position, so the usual practice is to reverse it in the books and re-issue the payment if it is still due. The Pro edition ages every outstanding item and flags stale cheques (90 days by default, adjustable).
Good reconciliation habits
Reconcile every bank account every month, soon after month-end. Keep the bank statement, the BRS and the supporting list together. Investigate any item that stays unreconciled for more than a month. And have someone other than the person who records payments review the BRS — it is one of the simplest internal controls a small business can have.
Written by Prakash Bagchi, finance professional and founder of PB Lab. Last reviewed .