How bank reconciliation software typically works:

Bank reconciliation software is a tool designed to help businesses and individuals compare their financial records with the information provided by their bank.

• Importing Transactions: Users can import their bank statements or download transaction data directly from their bank into the software. This data includes details such as deposits, withdrawals, and other financial activities.
• Matching Transactions: The software then compares the imported transactions with the user's accounting records. It attempts to match each entry in the bank statement with the corresponding entry in the user's books.
• Identifying Discrepancies: Any discrepancies or differences between the user's records and the bank statement are flagged by the software. These discrepancies could result from errors, missing transactions, or timing differences.
• Reconciliation: Users can review and reconcile the discrepancies by adjusting their accounting records to match the bank statement. This process helps ensure the accuracy of the financial data and identifies any potential issues that need to be addressed.
• Reports and Audit Trail: Bank reconciliation software often provides detailed reports and an audit trail, allowing users to track changes made during the reconciliation process. This transparency is crucial for maintaining financial accountability and compliance.