Reconciliation
Also known as: bank reconciliation · account reconciliation · balancing the books
Definition
Reconciliation is the process of comparing your bookkeeping records against your actual bank statements to ensure they match. Every transaction in your books should correspond to a real transaction on your bank statement, and vice versa.
Detailed Explanation
Reconciliation is the most important accuracy check in bookkeeping. Without it, you can have: missing transactions (a payment you forgot to record), duplicate transactions (recorded twice by accident), incorrect amounts (wrong due to currency conversion or typo), or phantom transactions (recorded but never actually occurred). Freelancers should reconcile monthly — compare your bookkeeping dashboard against your bank and payment platform statements. If the numbers don't match, investigate the difference. AI bookkeeping reduces reconciliation work because transactions are imported directly from source documents (CSVs, screenshots) and matched to bank records automatically, but monthly review is still a best practice. Reconciliation also catches bank errors (rare but possible) and unauthorized charges.
Freelancer Example
A freelancer's bookkeeping dashboard shows $8,500 in income for June. Their bank statement shows $8,350 in deposits. The $150 difference is PayPal fees that were deducted before deposit — the AI recorded both the gross income ($8,500) and the fee expense ($150), so the net matches the bank deposit. Reconciliation confirms everything is accurate.