What is a bank statement?
A bank statement is a document outlining every transaction in a bank account over the course of a month. This document is issued by the bank, and will include both any payments made from your account in the month, and any money thats been put into your account in the month. Bank statements also display your opening balance at the start of the month and your closing balance at the end. Keeping hold of your bank statements is the best way to monitor your spending, as they offer a complete, detailed look at the activity on your account. Each transaction shown on a bank statement will show who paid you or who you paid, the date of the transaction, and the exact amount and currency of the transaction. How to get a bank statement online  Any person or group who has a bank account can access their bank statement. Traditionally, bank statements are paper documents that are mailed to the account holder, but these days, all UK banks offer e-statements that can be accessed online. When you set up a new bank account, youll be given the option to go for paper statements or e-statements. If you already have an account and would like to switch to electronic bank statements, you can request this from your bank. Its wise to always keep your bank statements stored securely, for as long as possible. While you might be able to access old bank statements that you havent kept through your bank, this can be a complicated process. Instead, its best to hold on to every bank statement and make sure theyre filed properly, whether digitally or with paper bank statements. You never know when you may need to access past statements, whether its for tax audits, reconciliation, or otherwise. Reconciliation is an accounting process wherein two sets of records are compared to ensure everything matches up and accounts are up to date. For instance, a business may keep its own records of funds and transactions using its own system for accounting, such as keeping balance sheets and cash books. Reconciliation is where youd compare your own records with a bank-issued statement to make sure everything lines up. Should there be any discrepancies on the banks end found during reconciliation, it would be the account holders responsibility to raise this with the bank immediately to amend the issue. Reconciliation can help you identify fraudulent behaviour as well. For example, if funds have been fraudulently removed from your account by a third party, this is unlikely to appear in your personal records, but will be present in your bank statement. Businesses should aim to complete a bank reconciliation statement in their records at least once a month. Unreconciled records spanning months or even years will mean a lot of costly work for your accountants, and could lead to big issues when it comes to tax audits. Tax inspectors will apply more scrutiny to account holders who do not regularly reconcile their records. During reconciliation, your account balance according to the bank is compared to the general ledger of your business, which may include both bank and cash transactions. The first thing you should do is compare the deposits from each record and check that the numbers match up. If any corrections are necessary, mark these changes on your bank statement. This might include adding deposits in transit that have yet to be added by the bank or deducting outstanding cheques that are yet to be cleared by the bank. Youll then need to adjust your balance sheet to include any bank costs, like service charges or fees from the bank, or any interest on your account balance. Youll also have to account for any NSF (not sufficient funds) checks that have not been honoured by the bank due to insufficient funds from the payer; these will need to be deducted from your balance sheet. After making necessary adjustments on either side, compare your balance sheet with your bank statement again to ensure everything matches up. Be sure that you keep record of the reconciliation process for use in general ledgers. It would be best practice to perform reconciliation every time you receive a new bank statement, generally at the end of each month. Having said that, you might consider reconciling your account more frequently, like weekly or even daily, or using a detailed cash book if your business makes a lot of transactions. It certainly helps to use software like Xero, which can automate the reconciliation process and ensure your businesss records are in order. We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.