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What Is Balance Sheet Reconciliation?

Balance sheet reconciliation is the process of confirming the closing balances on your company’s balance sheet against your support documentation. It’s one of the steps in the financial close process.

Why Is Balance Sheet Reconciliation Important?

Your business’s decision makers—and external stakeholders such as investors or potential investors—need an accurate view of the company’s true financial position. To ensure your balance sheet accurately reflects this, you must confirm its numbers by verifying the trial balances in your general ledger with the corresponding document and transactions, such as a sub-ledger or a bank statement.

Why perform reconciliation processes?

  • Detect fraud
  • Discover theft
  • Identify accounting and/or data entry errors
  • Improve internal control weaknesses
  • Support tax reporting
  • Enable better cash flow management

Your business should perform a balance sheet reconciliation—at minimum—monthly, as part of your month-end close process and account reconciliations. Some companies perform this process daily.

Monitor your company’s financial health with this free Monthly Balance Sheet Template for Excel.

Key Takeaways

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Performing a balance sheet reconciliation improves your business’s ability to recognize internal control weaknesses, such as fraud, theft and data entry errors.
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Businesses should perform a balance sheet reconciliation at least once a month.
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Balance sheet reconciliations enable better cash flow management.

How To Perform A Balance Sheet Reconciliation

These are the steps for performing a balance sheet reconciliation:

  • Print/Download your general ledger.
  • Print/Download your bank statements.
  • Compare the transactions in your general ledger to those in your bank statements.
  • Mark all the transactional discrepancies.
  • Investigate these discrepancies.
  • Make corrections to your general ledger to reconcile the incorrectly recorded transactions.

How Can Finance Teams Improve the Balance Sheet Reconciliation Process?

Verifying the numbers on your balance sheet is critical to providing an accurate view of the company’s true financial position to your decision makers. Without a trustworthy snapshot, your stakeholders and potential investors can’t make confident decisions.

Close faster with Vena’s Financial Close Management Software. Cut your month-end close times, automate your workflows and produce accurate reports for your decision makers.

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