Balancing your bank account

When you enter records of money paid into and out of your bank account into the cash book, there is a delay of at least a couple of days until these transactions are cleared through the banking system and appear on your bank statement. Therefore, the bank balance according to the cash book will normally be different from that on your bank statement at any given date.

To ensure that the difference between the two balances is due merely to the time difference in entering items, you should draw up a bank reconciliation statement:

1: Bank balance per the cash book: £
Balance at beginning of month (in hand) 654.20
Add cash book receipts (total for month) 3421.06
Less cash book payments (total for month) (2189.70)
Balance at end of month (in hand) 1885.56

 

2: Bank reconciliation from the bank statement: £ 
Balance at end of month (from bank statement) 2189.65 
Add outstanding bankings (bankings made in the last few days
of the month that do not appear on the
statement until after the end of the month)
561.20 
  2750.85 
Less outstanding cheques written before the end of the month
but not yet presented to the bank
 
Cheque No. Amount  
001378 69.25  
001381 686.19  
001384 50.00  
001385 59.85  
    (865.29)
Balance at end of month: 1885.56

If after your reconciliation there is still a difference between the two balances, check the cash book and bank statements in detail to find the discrepancy.

Common mistakes are:

  • Cheques either not recorded in the cash book or entered twice
  • Standing orders or direct debits not recorded
  • Bankings or giro credits not recorded
  • Mis-additions in the cash book
  • Cheques still outstanding from the previous month

You should amend the cash book to agree with your bank reconciliation.

Do call us if you would like further help or advice in this area.

Call Back Request

9 + 10 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.

Speak to a
friendly expert
01442 275789

Monday to Thursday (8am to 8pm)

Friday (8am to 7pm)

Saturday (10am to 4pm)

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
  • Money back service guarantee. All your Emails received by 4pm on any normal working day will be answered the same day. Should it be necessary to leave a telephone message it will be answered same day/following day latest or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: newbusiness@sjdaccountancy.com. Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.