Account Reconciliation

Definition

Account reconciliation is the process of comparing transactions in your accounting records to external statements (bank, credit card, vendor statements) to ensure they match. It identifies discrepancies, errors, and timing differences to ensure your books accurately reflect reality.

Why It Matters for Small Businesses & Fractional Teams

• Catches errors and discrepancies before they cause bigger problems
• Ensures accurate financial reporting and cash flow visibility
• Identifies timing differences that affect cash position understanding
• Provides confidence that your books are complete and accurate
• Required for accurate financial statements and tax reporting

How It Works in Practice

Account reconciliation involves comparing each transaction in your accounting system to transactions on external statements, matching them by date, amount, and description. Automated systems can match most transactions automatically, but you still need to review exceptions, handle timing differences (like checks not yet cleared), and investigate discrepancies. The goal is to reconcile ending balances and ensure all transactions are accounted for.

Common Pitfalls or Misconceptions

• Thinking automation eliminates review—you still need to investigate exceptions and discrepancies
• Not reconciling frequently enough—monthly reconciliation catches problems too late
• Ignoring small discrepancies—they can indicate larger systemic issues
• Not documenting the process—you need a clear audit trail
• Assuming external statements are always correct—errors happen on both sides

How This Term Relates to Other Concepts

Account reconciliation includes bank reconciliation, credit card reconciliation, and vendor statement reconciliation. It's a core bookkeeping task that's often automated through bookkeeping automation and AI bookkeeping systems. It's essential for accurate financial reporting and is typically part of the month-end close process.

How Omniga Uses This Concept

Omniga automates account reconciliation by matching transactions from external feeds to entries in your books, but always requires human review of exceptions and discrepancies. Our review-first approach ensures accuracy while delivering the efficiency gains of automation. We make reconciliation visible and trackable, so you can see what's been matched and what needs attention.