Bank Reconciliation
The process of matching payment records against bank statements to verify all payments cleared correctly.
Definition
Bank reconciliation compares your internal payment records against the bank statement to identify discrepancies. In AP, this means verifying that all payments issued match bank debits, identifying outstanding checks, catching unauthorized payments, and ensuring the cash account balance is accurate.
Why It Matters
Bank reconciliation catches unauthorized payments, identifies errors, and ensures cash balances are accurate. It is a critical fraud prevention control and audit requirement.
Examples
Outstanding check
Check #4521 for $3,200 was issued on the 25th but has not cleared the bank by month-end. It appears as a reconciling item.
Unauthorized payment
Bank statement shows a $5,000 debit not matching any AP payment. Investigation reveals it is an unauthorized ACH debit requiring dispute.
How Nexus AP Helps
Nexus AP automates bank reconciliation by matching payment records to bank transactions, highlighting unmatched items for immediate investigation.
Start Free TrialFrequently Asked Questions
How often should bank reconciliation be done?
At least monthly for period-end close. Many organizations reconcile daily or weekly for better cash management and faster fraud detection.
What are common bank reconciliation differences?
Outstanding checks, deposits in transit, bank fees, interest, ACH timing differences, and errors on either side.
Category
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