Bank statement reconciliation: what it is and how to do it
What bank statement reconciliation means, how reconciling items explain differences, and how to reconcile in QuickBooks Online and Xero, with a worked example.
On this page
Bank statement reconciliation is matching the transactions in your accounting records with the transactions on your bank statement, to confirm that both sets of records agree (Xero (opens in a new tab)). In QuickBooks Online, an account is balanced when the Difference reaches $0.00. To work through a statement line by line, export it to a spreadsheet with bank statement to Excel or the free bank statement converter.
What reconciliation means
Intuit defines reconciling as matching the transactions you've entered in QuickBooks with your bank and credit card statements (Intuit (opens in a new tab)). It says regular checks help you find possible suspicious activity and avoid bookkeeping mistakes.
Xero's definition adds the goal: to confirm that both sets of records agree and that your books reflect your true financial position (Xero (opens in a new tab)). Reconciliation applies to any account where money flows in and out: checking, savings, credit card and payment processor accounts.
Convert a PDF statement for free
Upload a text PDF bank or credit-card statement and see whether its transactions add up to its own balances before you download Excel or CSV. Up to 10 pages a day, no account needed.
Reconciling items
Some differences between the books and the bank are temporary (Xero (opens in a new tab)). Xero names outstanding checks, pending deposits and bank fees as examples.
Any transaction that appears in one record but not the other is a "reconciling item." These items explain the gap between your book balance and your bank balance. Once every reconciling item is identified and accounted for, both balances should match.
How to reconcile in QuickBooks Online
Intuit's steps for QuickBooks Online (Intuit (opens in a new tab)):
- Go to All apps, then Accounting, then Reconcile.
- Review the Last statement ending date. The statement you reconcile now should start the day after it.
- Enter the Ending balance and Ending date from your account statement.
- Select transactions. The Cleared balance changes as you go. Continue until the Difference is $0.00.
If you can't find the error, QuickBooks lets you finish and accept the difference. It then creates a journal entry that adjusts your books by that amount. Intuit says to talk to your accountant before doing this.
Each reconciliation starts with a beginning balance that should match the ending balance of the last one (Intuit (opens in a new tab)). If it doesn't, QuickBooks won't let you continue until you account for the difference.
How to reconcile in Xero
In Xero, you reconcile on the Reconcile tab, matching bank statement lines on the left against transactions in Xero on the right (Xero Central (opens in a new tab)). The aim is to match each statement line to an existing transaction, or create one during reconciliation.
Xero tracks two balances for each bank account (Xero Central (opens in a new tab)):
- Statement Balance: the opening bank balance plus all bank statements imported into the account.
- Balance in Xero: the opening bank balance plus the account transactions created in Xero.
Once the account is reconciled, the two should be the same (Xero Central (opens in a new tab)). Xero also says to check that the opening balance is correct and that the statement balance matches the balance in your actual bank account.
Checking a statement is not reconciling
Two checks are easy to confuse.
Checking a statement against itself. The opening balance plus every transaction on the statement should equal the closing balance. It tests whether the transactions add up to the statement's own balances. It says nothing about your books.
Reconciling your books to the bank. This compares your accounting records with the statement and explains any difference with reconciling items, as described above.
A worked example with fictional numbers:
| Date | Description | Amount | Balance |
|---|---|---|---|
| 2026-09-01 | Opening balance | 2,000.00 | |
| 2026-09-03 | Example Rent Ltd | -850.00 | 1,150.00 |
| 2026-09-10 | Example Client payment | 1,200.00 | 2,350.00 |
| 2026-09-30 | Example bank fee | -12.50 | 2,337.50 |
| 2026-09-30 | Closing balance | 2,337.50 |
The statement checks out: 2,000.00 − 850.00 + 1,200.00 − 12.50 = 2,337.50, and each running balance follows from the one before.
Now the books. Say the books also record a check of 300.00 to Example Supplies that the bank hasn't paid yet, and the bank fee isn't recorded yet. The book balance is 2,000.00 − 850.00 + 1,200.00 − 300.00 = 2,050.00. The gap to the bank's 2,337.50 is 287.50. The two reconciling items explain it: the outstanding check (+300.00) and the unrecorded fee (−12.50).
Where StatementLoom fits
StatementLoom does the first kind of check. It reads text PDF statements, not scans, and confirms that the opening balance plus every transaction equals the closing balance, and that each printed running balance follows from the previous one. Rows that break the check are flagged with the expected and actual value, and exports are only possible once the statement reconciles.
The Excel export has a sheet with Date, Description, Amount, Debit, Credit and Balance, plus a Summary sheet with the opening and closing balances and the reconciliation result. Reconciling your books to that statement is still done in your accounting software.
Sources
- Xero: What is bank reconciliation? (opens in a new tab)
- Intuit: Reconcile an account in QuickBooks Online (opens in a new tab)
- Intuit: Fix beginning balance issues when reconciling in QuickBooks Online (opens in a new tab)
- Xero Central: Bank reconciliation in Xero (opens in a new tab)
- Xero Central: Why are the Statement Balance and Balance in Xero different? (opens in a new tab)
- Xero Central: Reconcile your bank account (opens in a new tab)
Tools for this
-
Free bank statement converter
Turn a text PDF statement into Excel or CSV after a balance check. No account needed.
Frequently asked questions
What is bank statement reconciliation?
It is matching the transactions in your accounting records with the transactions on your bank statement, so that both sets of records agree.
What is a reconciling item?
A transaction that appears in one record but not the other, such as an outstanding check, a pending deposit or a bank fee.
When is an account reconciled in QuickBooks Online?
When the Difference is $0.00 after you match transactions against the statement's ending balance and ending date.
Is checking that a statement adds up the same as reconciling?
No. Checking that the opening balance plus the transactions equals the closing balance tests the statement itself; reconciling compares your books with the statement.
Convert a PDF statement for free
Upload a text PDF bank or credit-card statement and see whether its transactions add up to its own balances before you download Excel or CSV. Up to 10 pages a day, no account needed.