Bank reconciliation is the process of matching a company's own recorded transactions against its actual bank and credit card statements, confirming every transaction is accounted for and the ending balances agree.
Differences show up for ordinary reasons: a check that hasn't cleared yet, a bank fee the company hadn't recorded, or a payment logged on the wrong date. Reconciliation catches these gaps, along with the more serious ones, a duplicate charge, a missed transaction, or outright fraud, before they compound across multiple months.
It's one of the most basic steps in real bookkeeping, and skipping it is exactly how small errors turn into a books-wide mess that's hard to untangle later. A proper monthly close should never happen without every account reconciled first, not treated as an optional cleanup step.
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