Reconciliation is the monthly process of comparing what Books says your bank balance should be against what your bank actually shows. The two should match. If they don't, reconciliation is how you find and fix the discrepancy.
Why Reconcile
Catch errors — typos, missed transactions, duplicate entries
Catch fraud — unauthorized charges show up as transactions you don't recognize
Clean books for taxes — your accountant or tax software needs reconciled books to file accurate returns
Audit trail — a reconciled month is locked, preventing accidental backdated changes
When to Reconcile
Monthly is standard. Reconcile after your bank statement is finalized (usually a few days after month-end). Some agencies reconcile weekly if they have high transaction volume; some reconcile only at quarter-end. Monthly is the sweet spot for most.
The Reconciliation Flow
Go to Banking → pick the account → click Reconcile.
Enter the statement ending date and statement ending balance from your bank statement.
Books shows you all unreconciled transactions in that period, with running totals on both sides.
Check off each transaction that appears on your bank statement. Books updates the running totals.
When the running total matches your statement balance, the Difference field reads $0.00 — you're done.
Click Finish Reconciliation to lock the month.
When the Difference Won't Zero
A non-zero difference means Books and your bank disagree about what happened. Common causes and how to fix:
Transaction in your bank statement but not in Books — add the missing transaction
Transaction in Books but not on bank statement — most often a future-dated transaction that hasn't cleared. Skip it for this reconciliation; it'll appear next month.
Wrong amount — typo when manually entering, or fee that wasn't included. Edit the transaction.
Wrong date — transaction is in the next/previous month's bank statement, not this one. Move it or include it in the right month.
Wrong opening balance — your starting point doesn't match what your bank says you started with. Edit the bank account's opening balance.
Reconciliation History
Every completed reconciliation is logged. Go to Banking → bank account → Reconciliation History to see when each month was reconciled, by whom, and the statement balance. Reconciled months can be re-opened if needed, but the change is logged.