Bank Reconciliation

Bank Reconciliation is the closing step — confirming that ERPNext's view of a bank account matches the bank's view at a specific date.

Why reconcile

Every month (or quarter), the balance shown in your books for a bank account should match the closing balance on your bank statement. If it doesn't, something is missing — a payment recorded but not on the bank, a bank fee not recorded, etc.

Reconciliation finds and fixes these gaps.

Activity	What it does
Processing the statement	Bringing the day-to-day transactions in (see Bank Statements)
Reconciliation	Confirming the closing balance matches at a date — typically end of month

You process transactions throughout the month; you reconcile at the end.

Run the reconciliation

Bank Reconciliation Statement (in Reports):

Bank Account — which one
Account — the corresponding bank account in your Chart of Accounts
Report Date — usually month-end

The report compares:

Book balance — what ERPNext says the bank account holds
Outstanding — payments recorded in ERPNext but not yet cleared at the bank
Bank statement balance — what the bank says

The math:

Book balance
- Outstanding payments (not yet on bank statement)
+ Outstanding receipts (deposited but not yet on bank statement)
= Bank statement balance

If they match — done. If they don't, find the difference.

Finding the difference

Common causes:

A bank fee never recorded — make a Journal Entry
A duplicate Payment Entry — Cancel one
A transaction posted to wrong bank account — Cancel + Amend with the right account
A timing difference — a Payment Entry on Dec 31 hits the bank on Jan 2 (legitimately outstanding)

After the period closes

Once reconciled and you've moved past the period, lock the period via Year-End Closing or just don't post into closed months. This stops accidental edits to already-reconciled history.