Bank reconciliation: a step-by-step guide

What the bank reconciliation: a step-by-step guide gives you

A bank reconciliation proves that your records and the bank agree, and it catches mistakes and fraud early. This guide explains why balances differ, walks through the reconciliation step by step with a worked example, shows how to treat deposits in transit and unpresented cheques, and includes a reconciliation form and an M-Pesa version.

Who it is for

Bookkeepers, accountants and business owners who reconcile bank and M-Pesa accounts, and people learning how it is done.

How to use it

1. Get the bank statement and your cashbook for the same period.
2. Tick off every item that appears in both.
3. List the items that remain on each side.
4. Complete the form until the two balances agree.
5. Keep a signed or dated copy with your records, so you can show what was agreed or done.

What is inside

• Why the cashbook and the bank differ
• Step-by-step method
• Worked example with figures
• Blank reconciliation form
• M-Pesa reconciliation notes

The document is a ready-to-print PDF with these parts: Why the balances differ, The method, A worked example, Your reconciliation, M-Pesa accounts. It is laid out for A4, with the headings, tables and tick boxes already in place, so you can print it and fill it in by hand, or type into it with a PDF editor.

Tips for getting it right

• Reconcile every month, on the same day.
• Investigate any difference you cannot explain.
• Clear old unpresented cheques.
• Keep the signed reconciliation with the statement.

Why it helps

Accounting records let you answer three questions at any time: what came in, what went out and who owes whom. Kept consistently they also make tax returns, loan applications and the sale of a business much easier, because the evidence is already organised. Entering transactions the day they happen is far cheaper than reconstructing them at year end.

Questions people ask

Can I edit it? It is a PDF, so it is meant to be printed and completed, or filled with a PDF editor. If you want to change the wording, copy the text into Word or Google Docs and adapt it to your business.

Is it legal advice? No. It is a practical starting point written for Kenya. Rules change, so check the current position and ask a professional where the stakes are high.

Will it work on my phone? Yes for reading. For filling in and printing, a computer or a PDF app works best.

Keeping it safe and up to date

Good accounting records are a legal duty as well as a management tool: keep the supporting receipts and invoices with the workbook, and keep each year's copy for at least five years. Work on a copy, never on your only file, and back it up.

Read how to keep business records for KRA for the wider picture. See more accounting templates or ask us for a custom one.

This document is general information, not tax, legal or accounting advice, and it is not affiliated with the Kenya Revenue Authority. If something does not work as described, contact us and we will put it right.

Related guides, calculators and templates

• Guide: How to keep business records for KRA: what to save and for how long
• Guide: Bank reconciliation step by step: match your books to your bank
• Guide: Fixed assets and capital allowances explained for small businesses
• Another template: 13-week cash flow forecast
• Another template: Accounting policies and procedures manual template
• Another template: Accounts payable ageing schedule

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