How to reconcile a church bank statement.

What reconciling actually is

Reconciling is a heavy word for a simple act: you compare your record of the money against the bank's record of the same money, line by line, until every difference between the two is explained.

That is the entire idea. If you have ever sat at a kitchen table ticking checks off a paper statement with a pen, you have reconciled a bank account. Nothing more sophisticated is happening in accounting software; it is the same ticking, with the arithmetic done for you.

Churches do it once a month, when the statement arrives, for every bank account they hold. It is the habit that makes every other number trustworthy, because a balance nobody has ever compared against the bank is just a number your own records agree with.

Why the two numbers are allowed to disagree

The first thing that panics a new treasurer is that the two balances do not match. Almost always, nothing is wrong. Both records are correct and they disagree about timing.

Two things cause nearly all of it:

• Outstanding checks. You wrote a check to the volunteer who bought craft supplies. You recorded it the day you wrote it, which is right. She has not deposited it yet, so the bank has never heard of it. Your books are lower than the bank's balance by exactly that amount, and both of you are telling the truth.
• Deposits in transit. You counted Sunday's offering and recorded it Sunday. It reached the bank Monday afternoon, or Tuesday, and if the statement closes in between then the bank's balance is lower than yours by that deposit.

Doing it, in order

The order matters more than the software. Whatever you use, it goes like this.

• Finish the month's ordinary work first. Reconciling checks your bookkeeping; it cannot replace it. Every gift recorded, every bill entered and paid, every transfer typed in. Ten minutes of catching up first turns a miserable evening into a calm one.
• Start from the statement, not from your books. Take the statement's closing date and its ending balance, and copy the balance exactly as printed, pennies included. The statement is the authority here. You type what it says, not what you were hoping it would say.
• Tick only what the bank shows. Work down the statement, find each line in your own records, and mark it as cleared. The $500 deposit is on the statement, so tick it. The $120 electric check cleared, so tick it. The $42.35 check to the youth volunteer is not on the statement, so leave it alone. That is an outstanding check, and it is fine.
• Watch the difference walk toward zero. Good software shows you, as you tick, how far apart you and the bank still are. That number is the whole game.
• Stop at exactly zero, and only at exactly zero.

When the difference will not go to zero

Sooner or later you will tick every line you can find and still be off by some odd amount. Six dollars, say. This is the moment the job feels impossible, and it is actually the moment it becomes useful, because a difference is a clue, not a verdict.

Hunt in this order. It is almost always one of these, and they are listed by how often they turn out to be the answer:

• A bank fee or an interest line on the statement that you never entered. A monthly service charge is the classic. The bank knows about it and your books do not, so enter it now. The statement is your source document, and this is exactly what reconciling is for.
• Something entered twice. A gift counted by two people, a bill paid and then paid again. Your journal will show the twin sitting right next to its original.
• A typo. $120 typed as $210 is a ninety-dollar difference and one transposed pair of digits.
• A deposit the bank received after fees. You recorded the full amount of an online gift; the bank credited it net of the processor's cut. Both numbers are real; they are just different numbers.

Finishing, and what finishing means

When the difference reads zero and every line on the statement is either ticked or explained, you finalize. Most software then locks those ticked lines into a permanent checkpoint, so that month cannot quietly change underneath you later.

File the statement with the month's records, and you are done until the next one arrives. Once the habit is established this is genuinely a fifteen-minute job, and the first month is the only slow one.

One last thing worth knowing: a reconciliation proves your records agree with the bank. It does not prove every gift landed in the right fund, or that an expense was coded to the right line. Those are things a human notices. Reconciling is the floor, not the ceiling.