Get your bank accounts reconciled by a bookkeeper
If your bank account and your accounting software are not telling the same story, every financial decision you make is built on the wrong information
Bank reconciliation services for small businesses in Melbourne
Packages start at just $150 per month & the first consultation is free.
- If your bank account and your accounting software do not match, every financial report produced from those records is wrong, and every decision made from those reports is made on information that cannot be trusted
- A BAS lodged from unreconciled accounts is not a compliance document, it is an estimate submitted to the ATO as though it were fact, and the liability for the difference between the estimate and the actual position sits entirely with you
- Transactions that are sitting unreconciled in your accounting software are not a minor administrative backlog, they are errors accumulating in your financial records that become progressively harder and more expensive to correct the longer they remain there
- Bank feeds that are not set up correctly, or that have disconnected and been reconnected without the gap being addressed, are producing reconciliations that look complete but are missing real transactions that have gone through your account
- In one case managed by Clients Needs Bookkeeping, a business whose bank account had never been reconciled had more than 400 missing transactions and an incorrect GST position across five BAS returns, and the cost of those errors before they were identified and corrected exceeded $15,000
- Every week your bank reconciliation is not current is a week where cash flow decisions, payables scheduling, and BAS preparation are all being made from a financial picture that does not reflect what has actually happened in your business
Get all your transactions matched correctly to reconcile your bank accounts
Bank reconciliation is the process of matching every transaction in your bank account against a corresponding entry in your accounting software. It confirms that the financial records reflect every dollar that has come in and gone out of the business, that every transaction has been correctly identified and coded, and that the closing balance in the accounting system matches the closing balance on the bank statement.
- When it is current and complete, the business owner has a reliable financial picture they can act on.
- When it is not, everything built on top of it including the profit and loss statement, the BAS figures, and the cash flow position becomes unreliable in ways that are not always visible until they cause a real problem.
For most small business owners, bank reconciliation is the task that falls behind first when things get busy, and the one that becomes hardest to catch up when it has been left for a while.
For example a restaurant owner managing the demands of a kitchen and a floor, a tradie juggling multiple active jobs, a consultant focused on client delivery, or a dental practice principal seeing a full patient list all have entirely legitimate reasons why sitting down to reconcile the bank account gets deferred.
The difficulty is that every week it is deferred, the backlog grows, the coding decisions become harder to make with confidence, and the financial reports produced in the meantime become progressively less reliable.
What bank reconciliation actually involves
Bank reconciliation in a modern accounting platform is significantly more efficient than it used to be, but it still requires professional attention and consistent judgement to produce a result that can be relied upon. The process involves more than matching numbers.
It requires a considered decision about how each transaction should be coded, what the correct GST treatment is, whether any transaction represents something unusual that needs further investigation, and whether the bank feed itself is complete and current or whether there are gaps that need to be addressed before the reconciliation can be considered accurate.
Both Xero and MYOB connect directly to Australian bank accounts through automated bank feeds, importing transactions daily without manual data entry. A bookkeeper manages the bank feed connection, ensures it remains active and current, and addresses any breaks or gaps in the feed promptly. A bank feed that has disconnected and been reconnected without the gap period being identified and the missing transactions added separately produces a reconciliation that looks complete but is missing real transactions, which means the bank balance in the software does not reflect the actual bank balance even though the reconciliation appears closed.
Each transaction imported through the bank feed is matched to an existing entry in the accounting software where one exists, or coded as a new transaction to the correct account where it does not. In Xero, bank rules can be configured to automatically suggest the correct coding for recurring transactions, which reduces the manual effort required for regular items like rent, insurance, subscription payments and utility bills.
A bookkeeper configures these rules correctly and reviews the suggestions before accepting them, because automated coding applied without professional review will simply automate whatever the original configuration assumed, including any errors built into that assumption.
Every transaction must carry the correct GST treatment.
- A purchase coded without GST when it should be GST-inclusive means an input tax credit is lost on the BAS.
- A sale coded as GST-inclusive when it should be GST-free means GST is being over-reported.
Applied consistently across every transaction over a full quarter, systematic errors in GST coding produce a BAS that does not reflect the business’s actual obligations or entitlements, and the difference between what was lodged and what should have been lodged can be material.
When a transaction in the bank account does not match any entry in the accounting software, it must be investigated before being coded rather than simply assigned to a convenient account. It may represent an invoice that was never entered, a payment that has been processed twice, a bank fee that was not captured, or a transaction the business owner needs to identify before a decision can be made about how to record it.
Leaving unreconciled items sitting in the system produces a reconciliation that appears closed but contains errors, and those errors compound over time as subsequent reconciliations are built on top of them.
What happens when bank reconciliation falls behind
A bank reconciliation that is one month behind is an inconvenience.
Three months behind, it begins to affect the reliability of every financial report the business produces and the confidence with which the BAS can be prepared. Six months behind, the BAS cannot be lodged on accurate figures because the GST position has not been established with any reliability.
Twelve months behind, the catch-up work required to bring the accounts current is substantial and the financial records for the year cannot be relied upon for tax purposes until the full reconciliation has been completed.
The steel manufacturer case study example is the most direct illustration of what an unreconciled bank account costs a business in practice.
- The bank account had never been reconciled.
- More than 400 transactions were missing from the accounting software entirely.
- Payroll had not been reconciled for more than twelve months.
- The GST position across five BAS returns was incorrect because the underlying records were incomplete.
Once we completed the reconciliation, identified the missing transactions, and corrected the errors, the business recovered more than $5,000 in GST refunds across those BAS returns, a $10,000 journal error was reversed, and the total financial recovery exceeded $15,000. None of that was recoverable until the bank reconciliation was completed properly.
Read the full case study here
The boating company case study provides a second illustration of what unreconciled accounts cost when the problem has been allowed to develop over time.
- Two deposit accounts were operating simultaneously with no reconciliation between them or against the bank.
- A $400,000 boat purchase had been coded as a customer deposit.
- Approximately $2 million in customer deposits had been misallocated across the accounts.
Three months of systematic reconciliation work were required to bring every clearing account to zero and produce a set of accounts that could actually be relied upon.
The caulking company case study demonstrates a different dimension of the same issue.
- Bank feeds had never been enabled, meaning every transaction was being entered manually rather than matched against an automatic import.
- The previous bookkeeper had built a process around manual bank reconciliation that was unnecessarily time-consuming and expensive to maintain, and the absence of bank feeds meant there was no automated check on completeness.
- Once bank feeds were enabled and configured correctly, the reconciliation process became faster, more reliable, and significantly less expensive.
How we manage bank reconciliation for Melbourne businesses
We manage bank reconciliation for small businesses across Melbourne and nationally, working within MYOB, Xero and QuickBooks across industries including hospitality, healthcare, real estate, trades, professional services and consulting.
Bank feeds are connected and maintained, transactions are matched and coded with the correct GST treatment applied, bank rules are configured for recurring items and reviewed before being accepted, unreconciled items are investigated and resolved rather than simply assigned to a convenient account, and the end of month balance is confirmed before the next period begins so that the reconciliation is always genuinely complete rather than technically closed but practically unreliable.
Bank reconciliation is available as a standalone service or as part of a broader bookkeeping package that includes accounts payable, payroll, BAS lodgment and financial reporting.
Packages start from $150 per month and the first consultation is free.
Examples of poor bank reconciliation practices
A business owner should not attempt to do bank reconciliations themselves without the proper education. As bookkeepers we find errors constantly where entries are in the wrong place. Here are some examples we have found;
- A repayment of a car loan was coded to MV rental expense with GST when it is a repayment of a loan with no GST attached.
- A regular transaction was coded without a rule so that transaction will just pop up again next time.
- A payment to a supplier with an invoice billed to a different company, this was put in as a expense but you can only claim it if the invoice is billed to the company, GST was also attached to the transaction but the supplier was not registered for GST.
- A contractor was coded to contractor expense, but when lodging yearly TPAR we need to have the supplier details added in and attached to each transaction otherwise this will create alot of work end of year.
- A debt collection payment was put as legal fees with no GST attached, but the payment is to pay off materials which included GST, only government fines have no GST.
- Tools below $300 were put as an expense but they should be an asset with the tax invoice attached for the accountant end of year.
- A payment to an individual for a training session, this was put as rent with GST but is staff training & the supplier was not GST registered.
- Food from Costco was put as advertising costs but this would be classed as entertainment and FBT may be involved.
Frequently asked questions
How often should bank reconciliation be done?
For most small businesses, weekly reconciliation is the right cadence because it keeps the records current, ensures unusual or incorrect transactions are identified promptly, and means BAS preparation at the end of each quarter is straightforward rather than requiring a catch-up of three months of accumulated transactions. Businesses with high transaction volumes including busy restaurants or retail operations may benefit from daily reconciliation to ensure nothing accumulates between sessions.
Our bank reconciliation is months behind. Can you fix that?
Yes. Catch-up bank reconciliation is a standard part of the service and something Matthew has managed many times for businesses across a wide range of industries. Regardless of how far behind the reconciliation is, he can bring it current, identify and correct any coding errors or missing transactions, and establish a process that keeps it current going forward. The further behind the reconciliation is, the more likely it is that the catch-up will identify errors that affect the BAS position, and those corrections can produce refunds or reduce the tax owed.
Can you set up bank feeds if we do not have them connected?
Yes. Matthew sets up and manages bank feed connections in both Xero and MYOB as part of the service. Most major Australian banks support automatic bank feeds with both platforms. Where a bank is not supported through the automatic feed, manual statement upload processes are established to ensure the reconciliation remains current and the records do not fall behind.
Does bank reconciliation affect our BAS?
Directly and significantly. The GST figures on the BAS are derived from the transactions in the accounting software, and the accuracy of those figures depends entirely on the completeness and correctness of the bank reconciliation. A BAS prepared from unreconciled accounts is a BAS prepared from unreliable figures, and the ATO’s data matching systems are increasingly capable of identifying discrepancies between what has been reported and what the bank and third-party records show.