# Bank Reconciliation Not Balancing? Work Through This Order

- Author: PreciseBankFlow (https://precisebankflow.com)
- Published: 2026-10-17
- Category: Finding reconciliation errors
- Canonical: https://precisebankflow.com/blog/bank-reconciliation-not-balancing

> Bank reconciliation not balancing? Check items in this order: balances, prior items, new items, amounts and sign, with the size of the gap as your clue.
When a bank reconciliation is not balancing, work in a fixed order instead of scanning at random. Confirm the two starting balances, then last month's open items, then this month's unmatched lines, then each amount and its sign. Write down the exact gap before you start, because its size often names the cause.

## Why is my bank reconciliation not balancing?

A bank reconciliation stops balancing when the adjusted bank balance and the adjusted book balance differ by an amount no listed item explains. Something is missing, doubled, keyed wrong, placed on the wrong side or dated in the wrong month. Rarely, the bank itself made the mistake.

The adjusted bank balance is the statement's closing figure plus deposits in transit, less outstanding checks, plus or minus any bank errors. The adjusted book balance is the ledger's cash figure plus or minus the items the bank recorded that you have not yet booked, such as fees, interest and returned deposits. When the two adjusted figures agree, every difference between bank and books has a name. When they do not, at least one difference is still unnamed.

The causes fall into a short list:

- **A starting figure is wrong.** The statement balance was copied from the wrong page, or the ledger balance was pulled at the wrong date.
- **An old item has changed.** Something marked cleared last month was edited, deleted or cleared a second time.
- **A line exists on one side only.** A fee nobody booked, a deposit the bank never received, a check entered twice.
- **A line has the wrong amount or sign.** Digits swapped, a decimal slid, a payment entered as a receipt.
- **A line sits in the wrong month.** The entry is right, but its date puts it in a period the statement does not cover.

Each of the four checks below targets one or two of these causes. Doing them in order matters because the early checks are fast and they rule out whole groups of errors at once. Searching individual lines before you trust the balances wastes the most time.

## Check one: the two balances on the unbalanced reconciliation

The first check asks whether the two numbers at the top of the reconciliation are the right ones. Compare the bank balance you typed with the closing balance printed on the statement, and the book balance with a ledger report run to the statement's end date, not to today.

Three slips cause most bad starting figures. The first is a statement period that ends on the 28th while the ledger report runs to the 31st, so three days of book activity sit in one figure and not the other. The second is copying the "available balance" from an online banking screen instead of the printed closing balance. The third is a ledger balance that includes a second bank account posted to the same cash account.

While you are here, foot the statement. Opening balance plus deposits less withdrawals should equal the printed closing balance. If it does not, a page is missing or a line was read wrong, and no amount of matching will fix that. This takes two minutes and it is the step most people skip.

## Check two: last month's reconciling items that are still open

Last month's open items are the outstanding checks and deposits in transit carried forward from the previous reconciliation. Check that each one either cleared this month or still appears on this month's list, and that none was dropped, doubled or changed in amount.

Put last month's list next to this month's statement. Tick each carried item as it clears. Any item that neither cleared nor reappears on the new list has fallen off, and its amount is now part of your gap. Any item that cleared but is also still listed as outstanding is being counted twice.

Also compare this month's beginning balance with last month's ending balance. If they differ, someone changed a transaction that was already reconciled. That is a separate problem with its own method, and you should solve it before going further, because every later check assumes the opening figure is sound.

## Check three: this month's unmatched statement and ledger lines

This check pairs each statement line with a ledger line and looks at what is left over. Leftovers on the statement are book-side items you may need to record. Leftovers in the ledger are timing items or errors. Either list can hold the line that explains the gap.

Work by type, not by date. Match checks by number first, because the number is a strong key. Then match deposits, then card and ACH lines, then fees. Matching by type keeps you from pairing a $500.00 deposit with an unrelated $500.00 transfer.

On the statement side, the usual leftovers are service charges, interest, returned items and automatic debits that nobody entered. On the ledger side, look for entries with no statement counterpart that are older than a few days. A deposit in transit dated the 31st is normal. A deposit in transit dated the 3rd is not, and it may be a duplicate or a deposit that was never made.

## Check four: amounts and signs on each reconciling line

The last check compares every matched pair amount by amount, and every reconciling item for direction. A check paired by number can still differ by a few dollars, and an item can be correct in size but added where it should be subtracted.

Amount differences hide in pairs you already ticked. Look at the cents as well as the dollars, and at any amount you keyed by hand. A $1,452.00 check in the ledger matched to a $1,425.00 line on the statement leaves a $27.00 gap that a quick tick would miss.

Sign errors behave differently. An outstanding check added to the bank balance instead of subtracted moves the result by twice its amount. So does a bank fee added to the book balance. If the gap is an even number, halve it and look for a reconciling item of that size.

## What does the size of the reconciliation gap tell you?

The size of the gap is a clue to its cause. A gap that equals one line points to an omission. A gap equal to twice a line points to a sign error. A gap divisible by 9 points to swapped digits or a slid decimal. A round number points to a missed fee or transfer.

| Gap pattern (examples) | Likely cause | Where to look first |
| --- | --- | --- |
| Exactly matches one statement or ledger line, such as $35.00 | Omitted item | Unmatched lines from check three |
| Twice a reconciling item, such as $640.00 for a $320.00 check | Wrong sign | Reconciling items list |
| Divisible by 9, such as $270.00 | Transposed digits or a decimal slide | Hand-keyed amounts |
| A few cents | Rounding or a keyed cents figure | Interest, card fees, foreign amounts |
| Same amount as last month's gap | Old item changed or dropped | Prior reconciliation |

The divide-by-9 rule deserves its own explanation, because it narrows the search more than any other test. The arithmetic and its limits are covered in [what a reconciliation difference divisible by 9 means](/blog/reconciliation-difference-divisible-by-9), and the practical search for a swapped pair is set out in [finding a transposition error in a bank reconciliation](/blog/transposition-error-in-bank-reconciliation).

### A worked example: a $245.00 gap

The figures here are an example. A small business reconciles March. The adjusted bank balance is $18,640.25 and the adjusted book balance is $18,395.25. The gap is $245.00.

1. **Check one.** The statement foots and both balances are taken at March 31. No change.
2. **Check two.** All four February outstanding checks cleared in March. The beginning balance matches February's ending balance. No change.
3. **Check three.** One statement line is unmatched: a $25.00 wire fee nobody booked. Recording it lowers the adjusted book balance to $18,370.25. The gap is now $270.00, which is larger than before. The fee was real, but it was not the whole story.
4. **Check four.** $270.00 is divisible by 9, and the quotient is 30. That hints at two neighbouring digits, in the hundreds and tens places, that differ by 3 and were swapped. A supplier check written for $1,580.00 was keyed in the ledger as $1,850.00, so the books show $270.00 less cash than the bank.

Correcting the ledger to $1,580.00 raises the book balance by $270.00 to $18,640.25, and the reconciliation balances. Both corrections stand: the fee and the keying error were separate items.

Note what happened in step 3. Fixing one item made the gap bigger. That is common when two errors overlap, and it is a reason to recompute the gap after every change rather than assuming each fix moves you closer.

## When to stop searching an out-of-balance reconciliation

Stop searching line by line when you have run all four checks twice and the gap is still unexplained. At that point, change method rather than repeating the same pass. Bring in a second person, compare daily balances, or reconcile a shorter period. Some accounts allow no unexplained gap at all.

A fresh reviewer often finds in ten minutes what the preparer missed in two hours, because the preparer reads what they expect to see. If no one else is available, reconcile one week at a time using the running balance on the statement, so the gap is pinned to a few days.

Some accounts have no tolerance. A client trust account at a law firm must agree to the cent across the bank, the trust ledger and the individual client ledgers. A shortfall there is a compliance problem, not a rounding question, which is part of why firms look at [trust accounting software built for law firms](/blog/trust-accounting-software-for-law-firms) rather than general bookkeeping tools.

### What not to do

Do not post a balancing entry to make the screen read zero while the cause is unknown. An unexplained adjustment carries the error into next month, where it combines with new errors and becomes harder to separate. If a small difference truly cannot be found, it should be written off only under a stated threshold, with approval and a memo that says what was searched.

Do not change last month's reconciliation to fit this month. If a prior item was wrong, correct it in the current period with a clear note, and leave the signed report as it was.

PreciseBankFlow is designed to foot each statement and list unmatched lines and differences as exceptions, so the first and third checks come back as a report you can read instead of a search you run by hand. You can [request early access](/get-started) for your firm.