What is bank reconciliation?

Bank Reconciliation (Bank Rec) allows you to match any bank transactions to any FreshBooks Entries in your account so that your cash balance on your Balance Sheet matches your actual bank account balance. This is an ongoing process with transactions updated automatically through your bank connection, rather than reconciling statement periods. This can be done anytime, or on a daily, weekly, or monthly basis.
First, you’ll connect to your bank account, then you’ll set an opening balance. Once completed, you match each transaction in your bank account to entries in FreshBooks, mark transactions as transfers, owner’s equity, expense refunds, and view which bank transactions don’t have a matching entry in FreshBooks yet. You can add, edit, delete or undelete transactions as needed.
Doing bank reconciliation on a regular basis helps you run your business better by keeping track of balances in your bank and credit card accounts, outstanding payments and deposits, as well as avoiding unnecessary bank fees and spotting errors faster.
 
Accounting features like Bank Reconciliation are only available on trials as well as Plus, Premium and Select plans. We also recommend inviting an accountant to help you learn more about bank reconciliation.
 
It is strongly recommended to reconcile at least once a month, and to review your bank connections on a monthly basis, especially if updating login credentials are required regularly. This will ensure no disruptions in your automatic import of transactions.
 
Select any of the below links to get started with bank reconciliation:
  1. Set up bank reconciliation
  2. Reconcile simple transactions
  3. Reconcile complex transactions
  4. Add, edit, or delete bank rec transactions
  5. Bank Reconciliation Summary report
 

Bank Reconciliation Checklist

Use the below steps to ensure your bank reconciliation is accurate:
  1. Set the Opening Balance - Add a new bank connection and set the opening balance, this only needs to be done once for each new bank connection
  2. Verify the Bank Account Balance in FreshBooks’ Bank Rec matches your actual bank account’s balance and compare your bank statement to the date of the last imported transaction in bank rec - this ensures your opening balance is correctly set and all transactions have been imported successfully
  3. Match Transactions - Expenses, invoice payments, bill payments, other income and credits entered in FreshBooks appear on the right, along with imported expenses (money-out transactions) from your bank connection
    1. Review all Likely Matches closely before confirming, or skip it if it’s your first time using bank rec to manually match instead
    2. Money-in transactions that are not processed through online payments need to be added in manually
  4. Mark as Transactions - Mark transactions as bank transfers (including credit card payments), owner’s equity or expense refunds as needed, marking owner’s equity or bank transfer transactions will automatically delete the associating expense entry in your FreshBooks account
  5. Reconcile as often as needed - Once all transactions on the left side under Bank Account Transactions have been reconciled, the FreshBooks Balance should match the Bank Account Balance; if balances don’t match, check for journal entries.