Bank reconciliation

What it is

Bank reconciliation means matching, line by line, the statement the bank issues against what your books show: invoices collected, expenses paid, fees, direct debits for taxes. When everything matches, the book balance and the bank balance explain each other. When it does not, the reconciliation points to the item that is missing or surplus.

Why it matters

Article 25 of the Spanish Commercial Code requires every business owner to keep orderly accounts, suited to the business, that allow its operations to be followed chronologically. The law does not name reconciliation as a separate step, but it is the usual way to check that the books reflect what actually happened in the account. Do it before settling taxes: an unrecorded receipt or a duplicated expense changes the bases.

How it is done

1. Get the statement for the period in a format you can process.
2. Mark each movement with the invoice or expense that explains it.
3. Review what is left unmatched: receipts without an invoice, invoices without a receipt, part payments, fees.
4. Record the missing items and check that the balances agree.

The hard cases are grouped payments, where one client settles several invoices in a single transfer, and part payments. They need judgement and sometimes a question to the client.

Common mistakes

• Reconciling only at year end, when nobody remembers what each movement was.
• Accepting a match on amount alone without checking date and description.
• Importing the same statement twice and duplicating movements.
• Leaving fees and direct-debit receipts unrecorded.
• Accepting an automatic match without reviewing it.

How Frihet handles it

You import the bank statement in OFX, MT940, CAMT.053 or CSV format, with duplicate detection, and Frihet suggests matches against your invoices and expenses for you to review and confirm. There is no direct connection to your bank: you upload the statement yourself. The decision on each match is yours.