In the last post, I espoused the necessary (and tedious) task of reconciling your bank & credit card statements. If you have ever reconciled in your life, then you know the aggravation one feels when there is $0.10 left unreconciled. Some people make an adjustment transaction in their ledger, but being the A-type personality that I am, I re-reconcile until I can account for every penny. Only make the adjustment transaction if it’s a small amount, and don’t make a habit out of it to mask sloppy bookkeeping.
Here are the most common reasons why your reconciliation is isn’t equaling $0
1. Missing receipts
This is by far the most common error. I don’t know about you, but I forget to submit my receipts (to myself) all the time. If I receive a receipt, I always enter it, but sometimes my receipts get lost in my wallet. If this was a purchase made by me, I just go back into my ledger and enter the transaction based on what I see on the statement so long as the amount seems legitimate. If this was a purchase made by my staff, I always ask for a copy of the receipt. The amount of the reconciliation discrepancy will be in the same amount as the missing receipt.
2. Doubled transactions
If an expense gets entered twice, then you might accidentally reconcile both transactions thinking that the computer didn’t catch your first click. The discrepancy would equal the amount as the duplicate transaction.
3. Slight changes in amount
Sometimes a recurring bill (like an insurance premium or payroll fees) can vary by a tiny amount, like 10 cents, but our brain doesn’t see the small difference until we’re left with a $0.10 discrepancy at the end of the reconciliation.
4. Misplaced decimals/extra zero
It’s easy to accidentally add an extra zero when it’s a “flat” number, like $100 vs $1000, and no decimal is needed in the entry.
5. Transposition errors
For me, this usually happens after the decimal – e.g., $100.25 gets accidentally transposed to $100.52.
6. Beginning balance is off
If you’re starting to reconcile, then you need to make sure your beginning balances match up before or else you will never reconcile to a $0 difference. Make an adjustment transaction before you begin.
7. Ending balance is off
If you made a typo entering your ending balance, then you will never be able to complete your reconciliation.
8. Credit card deposits re-grouped
Once in a while, the credit card deposits get mixed up…? I’m not sure what happens, but to illustrate this example, let’s say on Monday you collected $100 in credit card sales and on Tuesday, you collected another $100 in credit card sales. On the statement, sometimes it shows up as $60 deposited on Monday and $140 deposited on Tuesday. So while the total deposited remains the same, it involves another step of adding up the deposits to match them to your bookkeeping ledger.
9. Wrong account
An expense that you know you entered, could have been entered into the wrong account (e.g., credit card instead of business checking) accidentally.
10. Bank posting errors
Although less likely to happen, the bank could have made an error on their end when they posted a payment or deposit. If the writing on a check is particularly difficult to read, then the amount of a check could be off. Alternatively, as I have mentioned before, my check deposit got stuck in a drop box for over 2 weeks once. I realized that a batch of checks hadn’t been deposited into my business checking account during my monthly reconciliation, and had to call the bank for them to find it.
How to Make an Adjustment Transaction
Create an account named “Reconciliation Discrepancies” and categorize it as an expense. In whichever account you’re reconciling, you can create a transaction for the amount equaling the opposite of the discrepancy and choose Reconciliation Discrepancies as the account. So if you have a -$0.10 discrepancy, then your transaction amount will be $0.10. If your discrepancy is a positive number, then your transaction amount will be a negative amount (or rather, a “credit/refund” amount because the software may not let you enter a negative number).
Go through these top 10 common reconciliation errors when you hit a snag! I hope this eases your reconciliation frustrations a bit! Follow us on Instagram (@practice.management) to see our latest posts