Bank Reconciliation
Category
Financial Reporting
Bank reconciliation is the process of matching a company's internal cash records in the general ledger against the bank statement provided by the financial institution. The goal is to identify and explain every difference between the two records, including outstanding checks, deposits in transit, bank fees, and errors, ensuring the reported cash balance is accurate.
Why it matters
Bank reconciliation is the most common and most critical type of account reconciliation. Cash is the most liquid asset on the balance sheet, the most susceptible to fraud, and the most heavily scrutinized by auditors. Every organization, regardless of size or industry, must reconcile its bank accounts at least monthly.
The process seems straightforward in theory: compare the GL cash balance to the bank statement balance and explain every difference. In practice, it becomes complex at scale. Companies with dozens of bank accounts, multiple currencies, and high transaction volumes face a matching problem that grows exponentially. A single bank account processing 10,000 transactions per month requires matching each transaction against the GL, identifying timing differences, and investigating unexplained discrepancies.
The shift from manual to automated bank reconciliation has been one of the highest-ROI investments in modern accounting. Automated transaction matching can handle 1:1, 1:many, and many:many matching scenarios that would take humans hours to resolve. The remaining unmatched items are surfaced for investigation, allowing accountants to focus on genuine discrepancies rather than spending time on routine matching.
Dedicated transaction matching engines handle the volume problem by automating 1:1, 1:many, and many:many matching scenarios at scale.
How Arvexi handles this
Arvexi's Account Reconciliation module includes dedicated transaction matching capabilities designed for high-volume bank reconciliation. The platform ingests bank statement data through automated data feeds or manual upload, then applies configurable matching rules to automatically match transactions between the GL and bank statement.
Unmatched items are surfaced as reconciling items with AI-suggested explanations from Cortex. The auto-reconciliation engine can certify accounts where all items are matched and the variance falls within configured materiality thresholds, reducing manual review to only the accounts that require human judgment.