Why Reconciliation Is the Secret to Clean Books
- william8192
- Nov 1
- 2 min read
Every transaction in your business needs a second opinion. That’s what reconciliation provides—and why it’s one of the most powerful steps in modern bookkeeping.
Let’s break down what reconciliation means, why it matters, and how to stay on top of it.
What Is Reconciliation?
Reconciliation is the process of comparing your accounting records to external documents—usually your bank statements, credit card statements, or loan balances.
You're checking to make sure:
Every transaction in your books actually happened
There are no duplicates or missing entries
The account balances match the real-world numbers
It’s like giving your books a monthly reality check.
Why It’s So Important
Without reconciliation, your books may look fine—but hide major issues, like:
Overstated income or expenses
Uncashed cheques or unauthorized transactions
GST/HST errors that lead to over- or underpayment
Bank errors that affect payroll or supplier payments
Reconciliation also protects you during audits, grant reviews, and tax season.
When and How Often to Reconcile
At minimum, reconcile:
All bank accounts monthly
Credit cards and loans quarterly
Receivables and payables before tax filings or funding reports
Modern tools like QuickBooks Online and Xenett make this process faster and more accurate by flagging unmatched entries automatically.
Indigenous Business Tip
For Indigenous councils, reconciliation supports:
Program-based financial tracking
Clear reporting under the TH Financial Administration Act
Building trust with funders and community auditors
Reconciliation isn’t just technical—it’s about financial transparency.
Signs Your Books Haven’t Been Reconciled
Watch for these red flags:
Your book balance doesn’t match your bank
Transactions seem to disappear or repeat
You’re not confident in your GST/HST filing
CRA notices or penalties start showing up
If you’re seeing any of these, request a bookkeeping cleanup or paid diagnostic review.
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