How to reconcile your bank account
Your books are a claim about what happened. Your bank statement is the evidence. Reconciling is the only exercise that puts the two side by side, and it is the one most small businesses skip until their accountant asks for it in March.
Every figure in your accounts came from somebody typing it. The invoice total, the expense, the payment you thought had come in. The bank statement is the only part of your records that you did not write, which is what makes it worth something as a check.
Reconciling means going through a bank statement line by line and finding each line in your books. When every line is accounted for and the closing balance in your books equals the closing balance on the statement, the two agree, and you can say something you otherwise could not: that the money you think you have is the money you actually have.
That is the whole exercise. It sounds like an accounting chore and it is really a control, and it is the one that catches almost everything else: the invoice nobody ever sent, the debit order for a subscription cancelled eighteen months ago, the customer payment recorded twice, the supplier paid twice.
What reconciling proves, and what it does not
It is worth being precise about this, because a reconciled bank account is often mistaken for a clean set of books.
| Reconciling proves | Reconciling does not prove |
|---|---|
| Every movement of cash is recorded, once. | That each one is recorded against the right account. A payment to a supplier posted to the wrong expense category still reconciles perfectly. |
| Your bank balance in the books is real, not an estimate. | That your VAT treatment is right. A standard-rated expense entered as zero-rated reconciles just the same. |
| Nothing has been paid or received that you did not know about. | That your debtors and creditors are right. Unpaid invoices never touch the bank at all. |
So it is a foundation rather than a final answer. But nothing built on an unreconciled bank account is worth much, because the numbers underneath it have never been checked against anything external.
Start by getting the statement out of your bank
Every South African bank will give you a CSV of your transactions from internet banking. It is usually described as an export, a download or a transaction history rather than a statement, and it sits near the PDF statement rather than in place of it. You want the CSV, not the PDF: a PDF is a picture of your transactions and something has to retype it.
Take a full period, most often a calendar month, and note the opening and closing balances on it. Those two figures are what the reconciliation is checked against at the end, so a partial download makes the whole exercise unprovable.
A statement line can only be one of four things
This is the mental model that makes reconciling fast, and nobody ever explains it. Every single line on the statement, without exception, falls into one of four buckets.
| The line is | What it means | What you do |
|---|---|---|
| Already in your books | You recorded the invoice payment or the expense when it happened, and here it is clearing the bank. | Match it. Nothing new is created. |
| Not in your books yet | Real business money that you never got round to recording. Bank charges, a card payment, a customer who paid without telling you. | Record it now, from the line. |
| Never going in your books | It went through the business account but it is not the business. A personal transfer, a director's drawing already accounted for elsewhere. | Exclude it, deliberately. |
| Wrong | A bank error, a duplicate debit, a fraudulent card transaction. | Raise it with the bank. Do not record it as an expense to make the reconciliation balance. |
Work top to bottom and put every line in a bucket. The reconciliation is finished when there are no lines left over, and the balances agree. If you find yourself staring at a line for more than a few seconds, it is nearly always the third or fourth bucket, and treating it as the second is how a personal transfer becomes a business expense.
The four lines everyone gets wrong
If a first reconciliation goes badly it is usually one of these, and none of them is obvious.
Bank charges. Every account has them, monthly fees, cash deposit fees, card machine fees, and almost nobody records them as they happen. They are a real business expense and they belong in your books. Excluding them is not an option: exclusion is for lines that are not the business, and a bank charge is very much the business.
One payment settling several invoices. A customer owing you three invoices sends one EFT for the lot. There is one statement line and three invoices to clear, so a match against any single invoice leaves two outstanding and a credit floating on the account. It has to be recorded as one receipt allocated across the three.
Timing differences. You paid a supplier by EFT on the 30th and it cleared on the 2nd. Your books are right and the statement is right, and they disagree, because the money had left your control but not the bank. These are the one legitimate reason for the two balances to differ, which is why they are listed separately at the bottom of a reconciliation rather than hidden in it.
A refund is not income. A supplier refunds you for goods returned. It arrives as money in, so it looks like a receipt, but recording it as income overstates your turnover and, if you are registered for VAT, declares output VAT on a sale that never happened. A refund reverses the original expense. It is the same money going back the way it came.
Bank feeds, CSV, and which one you actually need
A live bank feed is a direct connection between your bank and your accounting software, so transactions appear without anybody downloading anything. It is genuinely convenient and the larger international packages have it.
OxyAccounting does not have bank feeds. It reads a CSV you download. That is worth saying plainly rather than burying, and it is worth understanding what it does and does not cost you, because the difference is smaller than the marketing around feeds suggests.
A feed saves the download. It does not save the reconciliation. The work in reconciling is deciding what each line is, and no feed decides that for you: the lines still arrive unclassified and still have to be put in one of the four buckets above. What a feed changes is the minute or two spent exporting a file once a month.
There is a quieter argument for the export as well. A feed keeps a continuous live connection to your bank account through a third party. An export does not, and for a business that would rather not have a standing link between its accounting software and its bank, downloading a file once a month is a feature rather than a limitation.
When the balances will not agree
You have been through every line and the closing balances still differ. Work through this in order, because the cheap checks catch most of it.
- Check the opening balance first. If your opening balance does not match the statement's opening balance, the difference is not in this month at all and no amount of work on this month's lines will close it. Go back to the previous reconciliation.
- Take the difference and search for that exact amount. Far more often than chance suggests, the difference is one transaction, sitting there waiting to be found.
- Halve the difference and search for that. A difference of exactly twice a transaction means something went in the wrong direction, money in recorded as money out. This catches more reconciliations than any other single check.
- Check for a transposition. If the difference divides exactly by nine, two digits have almost certainly been swapped somewhere, 54 typed as 45. That is an arithmetic property of transposed digits, and it is reliable.
- Look for one transaction recorded twice. Two identical amounts on the same day, one from the statement and one you had already captured, are the classic cause.
- Confirm your list of uncleared items. A payment you made that has not reached the bank is a legitimate difference. Any that are more than a few weeks old are not: an EFT that never cleared did not happen.
Do it monthly. The reason is not tidiness
Reconciling twelve months in one sitting is not twelve times the work of doing one month. It is considerably worse, for a reason that has nothing to do with volume: you no longer remember. A R2,400 payment to a name you half recognise is a thirty-second question in March and a genuinely unanswerable one in the following February.
There is a harder consequence for VAT vendors. If you file a VAT201 every two months on figures from an unreconciled ledger, you are declaring numbers nobody has checked against the bank, and a missed expense in that period is input VAT you never claimed. Reconciling before you file is what makes the return trustworthy. The field-by-field walk-through is in how to complete a VAT201 return.
A reasonable rhythm for most small businesses: reconcile within the first week of each new month, and lock the month once it agrees. Locking matters more than it sounds. A reconciliation that can still be edited is not really a sign-off, because next month's work can silently change last month's answer.
Where OxyAccounting fits
The product does the mechanical half of the four buckets and leaves the judgement to you, which is the right division: software can tell that a line matches a payment you already recorded, and it cannot tell that a transfer was personal.
Download a CSV from FNB, ABSA, Capitec, Standard Bank or Nedbank and import it under Accounting > Bank Reconciliation. All five are read directly, with no reformatting, because each bank lays its export out differently and that is the software's problem rather than yours. If you only have a paper statement, a manual statement lets you enter the period and balances by hand.
Matching runs once, on import, and tells you how many lines it cleared. It pairs a statement line with a payment, expense, supplier payment or advance already in your books on an exact amount within three days either side, and where a reference appears in the bank line's description that wins over a match found on the date alone. It is deliberately strict. A loose match that silently attaches the wrong invoice to the wrong receipt is worse than no match, because you will not notice it.
Everything it does not clear is the second bucket, and Add Transaction on the line is where it gets recorded. You say what the line was, a customer payment, an expense, an expense refund, a transfer between your own accounts, a salary or a SARS payment, and the form asks for what that kind of transaction needs and nothing else. It then posts properly to the ledger rather than just labelling the line, which is the part that separates a reconciliation tool from a bookkeeping one.
- A line that resembles something already reconciled raises a warning, showing you the other record so you can compare amount, date and reference. It warns rather than blocks, because sometimes you really did pay the same supplier the same amount twice.
- Excluding a line is a deliberate action, kept on the reconciliation rather than deleted, so a personal transfer is visibly excluded instead of quietly missing.
- A wrong entry can be undone. Unmatching a line reverses the payment, expense, transfer or refund it created, so a mistake costs a click rather than a correcting journal.
- A receipt in a foreign currency is handled as two figures, the rand that arrived and what it settled in the customer's currency, so the invoice clears at the rate it was raised at and the difference posts as an exchange gain or loss instead of leaving a meaningless credit on the account.
- Locking the reconciliation is the sign-off, and it is separate from locking the accounting period, so a signed-off month stays signed off.
All of it is in the single R149/month plan, with the double-entry ledger underneath it, because a reconciliation that does not post to a real ledger is just a tick list. The screen-by-screen steps are in the manual page on reconciling your bank, and the 14-day free trial needs no card.