Offshore bank reconciliation is usually the first task a business hands to an outside bookkeeping team, and for good reason. It is regular, it follows clear rules and it shows quickly whether your books can be trusted. Done every month, it catches missing transactions, duplicates and errors before they reach your financial statements.
Key takeaways
- A bank reconciliation proves that your accounting records match your bank statement for a given date.
- Every bank account, credit card and payment platform should be reconciled each month.
- Uncleared items older than a few weeks should be investigated, not carried forward indefinitely.
- An offshore team can reconcile from bank feeds and statements without needing permission to move money.
- A short reconciliation report each month lets you see the status of every account at a glance.
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What is a bank reconciliation?
It is a comparison of the balance in your accounting system with the balance on your bank statement at the same date. Any difference has to be explained, usually by checks that haven't cleared, deposits in transit, bank fees not yet recorded or mistakes. When every difference is explained, the account is reconciled.
How an offshore team does it
- Collect statements. The team downloads statements or uses the bank feed connected to your accounting software. View-only access is enough.
- Match transactions. Each bank line is matched to a recorded transaction. Unmatched bank lines are recorded or queried.
- Review uncleared items. Old uncleared checks and deposits are listed and followed up.
- Investigate differences. Duplicates, wrong amounts and transactions posted to the wrong account are corrected.
- Sign off. The reconciliation is saved in your software with the statement attached, and listed in a monthly status report.
The same steps apply to credit cards, PayPal, Stripe and other payment platforms, which are often where the biggest differences hide.
Ask us to check whether your accounts are reconciled
Problems reconciliation catches
- Transactions downloaded twice through a bank feed.
- Payments recorded to the wrong customer or vendor.
- Bank fees, interest and chargebacks that were never recorded.
- Old uncleared checks that should be voided or reissued.
- Transfers between accounts recorded on one side only.
If you are months behind, reconciliation is part of a catch-up project, which we cover in our post on catch-up bookkeeping. It is also the first step in outsourcing your bookkeeping to India. See our reconciliation service for details.
What a monthly reconciliation report should show
Ask your bookkeeping team for a one-page status report after each month's reconciliations. For every account, it should list:
- The account name and the statement date reconciled to.
- The statement balance and the balance in your books.
- Uncleared items, with the oldest highlighted.
- Any differences still under investigation, with a short note.
- Who reconciled it and when.
This takes the team a few minutes to prepare and lets you confirm at a glance that every account is up to date. If an account appears on the report with a difference month after month, that is the one to ask about.
Bank feeds and rules
Bank feeds save time, and most accounting systems let you set rules that suggest how recurring transactions should be coded. Rules need watching. A rule set up for one vendor can catch transactions from another with a similar name, and feeds sometimes import the same transaction twice. Your bookkeeper should review every transaction a rule suggests before accepting it, and check the feed's ending balance against the bank statement each month.
Frequently asked questions
How often should bank accounts be reconciled?
At least monthly, soon after the statement is available. Businesses with high transaction volumes often reconcile weekly so problems are found sooner.
Does an offshore bookkeeper need full access to my bank account?
No. View-only access or a bank feed into your accounting software is enough to reconcile. Payment permissions can stay with you.
What should I do with old uncleared checks?
Contact the payee to see whether the check was received. If it won't be cashed, void it in your records and follow any unclaimed property rules that apply to you.
Do I need to reconcile PayPal and Stripe accounts?
Yes. Payment platforms hold your money just like a bank account, and their fees, refunds and holds are easy to miss. Reconcile them to their monthly statements in the same way.
Get your accounts reconciled with Oakridge Global
Our bookkeepers reconcile bank, card and payment platform accounts every month for clients in the US and elsewhere. Schedule a consultation with Oakridge Global to get started.