A guide to automated general ledger reconciliation

Today, we use digital general ledgers, either as a standalone spreadsheet, or as part of an enterprise accounting application. This includes bank statements, workpapers, or downloaded reports you’ll use to substantiate the recon. Ensure you have access to any subledger information that corresponds to your general ledger accounts.

• This clarity helps prevent problems and makes training new team members easier.
• Reconciling the general ledger ensures you correctly recorded each transaction by comparing source documents — statements, checks, and invoices — with accounting records.
• Because of double entry accounting, if there’s an account not being reconciled, it’ll show up in another area of the balance sheet.
• This reliability is crucial for making informed decisions and steering the company in the right direction.
• In some cases, an expert bookkeeper can perform this critical routine, and in others, a trained CFO or controller must step in.
• The key is that the source documents must be independent—meaning maintained, verified, and/or provided by a third party.

Unchecked, Missing or Mislabeled Transactions

General ledger account reconciliation is the process to compare the general ledger with sub-ledgers and ensure consistent accuracy in records of transactions across the ledgers. The aim of general ledger reconciliation is to identify and resolve bookkeeping discrepancies in accounting across ledgers. When the company receives the June bank statement, the $12,547.22 will show up there and this matching will clear the reconciling items the following month. The value in the general ledger reconciliation process comes from identifying these discrepancies and taking action to correct as needed.

Credit card accounts

• If you want to include Intercompany activity withother Receivables activity, set the IncludeIntercompany parameter to Yes and include the Intercompanyaccount in the range of account values to extract.
• Regular GL reconciliation helps you catch errors early on, preventing small issues from becoming major headaches.
• This change has made the process quicker, more accurate, and more consistent, especially for reconciling inventory, payments, and assets.
• By following these steps, you can perform a thorough and accurate reconciliation.

All transactions impacting a company’s finances are recorded in the general ledger. This includes sales, purchases, payroll, inventory adjustments, loans, investments, and more. The general ledger provides a central repository to track the debits and credits across all accounts. The general ledger contains summary-level information for all of a company’s accounts, including assets, liabilities, equity, revenue, and expenses. It’s used to compile financial statements, perform analyses, and manage cash flows. Discrepancies in accounting are like seeds for future disappointment & frustration – Law Firm Accounts Receivable Management if you don’t stop them at the root, they will grow into massive headaches down the road.

Treasury & Risk

• Let’s now talk about some of the most common mistakes people make when doing manual reconciliation.
• Another common mistake is accidentally recording the same transaction twice.
• SL reconciliation may involve comparing individual sub-ledger entries with supporting documents.
• Coding a transaction for AR instead of AP is an easy recipe for a reconciliation mess – you’ve allocated money owed to money earned!
• Discover the top 5 best practices for successful accounting talent offshoring.

Additionally, because it maintains meticulous records of everything, it keeps the bank in good standing with regulators. So, to put it simply, automated general ledger reconciliation acts as a quick-thinking, safe, and right-on sidekick for banks. Transform your GL reconciliation process with automation that delivers precise financial insights.

How Often Should I Perform General Ledger Reconciliation?

You compare the amounts recorded in your GL with the amounts your customers have paid or still owe. Your job is to check whether the amount in your GL matches what the vendor has billed you. In other words, you make sure that the amount of money in your bank matches what your ledger says. Each type focuses on a specific area of your business, helping you keep track of all your financial activities. For example, if you find that an expense was recorded in the wrong account, you would create a journal entry to move it to the correct one. The goal here is to make sure that everything in your GL is accurate and matches the real-world numbers.

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Performing regular reconciliations according to best practices is key to strong financial controls. Reconciling the general ledger ensures you correctly recorded each transaction by comparing source documents — statements, checks, and invoices — with accounting records. Before accounting software existed, businesses would record every business transaction in a “general journal,” a chronological transaction log. General ledger reconciliation is a key accounting process that involves verifying that the balances in your general ledger are accurate and match external documents and workpapers. In doing so, teams ensure that their financial records are correct and reliable. For startups focusing on hardware and procurement, the risk of accounting errors and fraud is high.

Sometimes, there might be a delay in recording a transaction, or maybe a check hasn’t been cleared yet. It also helps other people in your team understand the reconciliation if they need to look at it later. You’ll compare the balance in your GL with the balance on your bank statement. But if they don’t, you’ll need to investigate further (we’ll talk about that in the next step). Keeping your financial records general ledger reconciliation accurate is critical for any business—big or small. Checklists outline all procedures to complete during each reconciliation.

• Investigate the root causes of discrepancies by tracing transactions, verifying source documents, and communicating with relevant stakeholders.
• Often companies will start with core accounts like cash, deferred revenue, payroll, and AR/AP.
• This process involves comparing the general ledger balances for asset accounts with supporting documentation—think of it as double-checking your records.
• By regularly performing these reconciliations, businesses can ensure that their financial data remains reliable, audit-ready, and aligned with overall business goals.
• This process should be done regularly, like at the end of every month, so that your bank balance and ledger stay aligned.

After finding and correcting discrepancies, you mustre-run the Prepare Receivables to General Ledger Reconciliation programand review the Summary report. Schedule a free demo today to explore how Accounting Seed helps you manage finances your way. Because when everyone follows the same steps, it reduces the chances of mistakes or missing important details. For example, if you’re looking at a lot of transactions in a “Travel” account and trying to find one specific transaction, Xenett’s “By GL” view groups transactions by account first and then by vendor. Instead of waiting until the end of the month or quarter to reconcile your accounts, Xenett allows you to keep an eye on things as they happen.