Ten Bank Reconciliation Errors You'll See This Month

1. Duplicate Transactions

Bank feed integration was supposed to eliminate manual entry. Instead, it created a new genre of error: the duplicate that looks legitimate because it exists in two places. You import a CSV statement while forgetting the feed is still connected. You manually mark an invoice as paid, then match the same payment when it flows through the bank feed. The transaction appears twice. Revenue doubles, or expenses inflate, and the reconciliation shows a phantom balance.

The problem is visibility. When you enter something manually, you own it. When software imports it automatically, you assume it's been checked. Most duplicates survive because they cross this trust boundary—half manual, half automated, never reconciled against each other.

Sage users see this when reconnecting a bank feed with an overlapping start date. QuickBooks users see it when processing bank feed transactions that match existing invoice payments. Xero users see it when importing CSVs during the feed connection period. The symptom is always the same: unmatched items on one side, unexplained differences on the other.

2. Timing Differences

A cheque written on 28 January appears in your books immediately. The recipient deposits it on 15 February. The bank clears it on 17 February. Three dates, one transaction. This is the reconciliation problem that predates computers: timing differences between when you record something and when the bank processes it.

Outstanding cheques are the classic case, but modern equivalents abound. Direct debits initiated but not yet collected. Card payments authorized but not settled. BACS transfers submitted Friday evening that won't clear until Tuesday. Each creates a temporary mismatch between book balance and bank balance.

The difficulty is distinguishing legitimate timing differences from errors. A cheque outstanding for three days is normal. Three months is a problem—it may never clear. A pending card payment is routine. One that's been pending for two weeks suggests a failed transaction that should be reversed.

Timing differences are not errors in the accounting sense. The entry is correct; the timing is just different. But during reconciliation, they look identical to mistakes, and inexperienced bookkeepers waste hours investigating transactions that will resolve themselves next month.

3. Bank Charges and Fees

Monthly account fees are predictable. Foreign transaction charges are not. Overdraft fees appear when cash flow is already tight. CHAPS fees vary by bank. These charges share a common trait: they appear on bank statements before anyone thinks to book them.

The reconciliation breaks because your books show £5,000 going out to suppliers, while the bank shows £5,047.50. The missing £47.50 is a combination of monthly fees (£15), two foreign transaction charges (£12 each), and a faster payment fee (£8.50). None of these were recorded when they occurred.

Variable charges are particularly insidious. Interest earned, overdraft fees, and foreign exchange margins all depend on balances and transactions you can't predict in advance. By the time the statement arrives, you've forgotten they exist.

Some banks compound this by batching fees. Instead of showing individual charges throughout the month, they deduct a lump sum on the last day. Your statement shows "Monthly Service Charges £43.80" with no breakdown. You're left guessing what it represents.

4. Direct Debit and Standing Order Mismatches

Standing orders are fixed. Direct debits are not. Your business insurance renews annually, and the premium increases by £38. The direct debit amount changes from £147 to £185. Your books still show the old amount because you set it up last year and never updated it.

Software subscriptions that bill monthly present the same problem at smaller scale. A service you use changes pricing from £49 to £59. The direct debit adjusts automatically. Your recurring transaction in the accounting system does not. For three months, you're £10 short on every reconciliation before someone notices.

The issue compounds when direct debits fail. A payment bounces due to insufficient funds, gets reattempted, succeeds on the second try with an added late fee. Your books show one transaction. The bank shows two attempts and a penalty charge. The dates don't match, the amounts don't match, and the reconciliation stalls.

Council tax, utilities, insurance, subscriptions, loan repayments—anything on direct debit is vulnerable. The amount changes, or the date shifts, or the payment fails, and your carefully set up recurring entries become liabilities instead of conveniences.

5. Transposition Errors

You enter £1,234. You mean £1,243. Two adjacent digits swap positions. This is a transposition error, and it has a mathematical signature: the difference between the correct and incorrect values is always divisible by nine.

The property is useful during reconciliation. If your books are over by £63, divide by nine: you get seven exactly. This suggests a transposition. £1,593 entered as £1,539 would produce this difference. £2,016 entered as £2,061. The divisibility test doesn't tell you which transaction is wrong, but it narrows the search to transpositions rather than missed entries or duplicates.

Transpositions are human errors. Software doesn't swap digits when importing bank feeds. But bookkeepers do when manually entering invoice totals, cash receipts, or payments from scanned documents. The more manual entry you perform, the more transpositions you'll encounter.

Certain number patterns are more vulnerable than others. Sequential digits (£1,234), repeated digits (£1,111), and mirror patterns (£1,221) all invite finger errors. If you're reconciling a retail business with hundreds of small cash transactions, transpositions will be routine.

6. Missing Transactions

Cash deposits disappear. Inter-account transfers get recorded on one side but not the other. A supplier payment exists on the bank statement but nowhere in the books. Missing transactions create imbalance, and unlike timing differences, they don't resolve themselves.

The most common cause is workflow gaps. A payment is made via online banking outside the accounting system, then forgotten. An employee deposits cash from a trade show without documentation. A bank transfer is initiated by someone who doesn't have access to the accounting software. The transaction happens, but the record does not.

Refunds are particularly vulnerable. A supplier refunds an overpayment. The money appears on the bank statement as a credit. The bookkeeper, seeing an unexpected deposit, either ignores it (hoping it will make sense later) or miscategorizes it as income. The original expense remains on the books, and the refund is never applied against it.

Inter-account transfers suffer from a different problem: dual entry errors. You record the transfer out of Account A but forget to record the corresponding deposit into Account B. Account A reconciles perfectly. Account B shows an unexplained deposit. If you're reconciling the accounts on different days, you may never connect them.

7. Wrong Account Coding

The amount is correct. The date is correct. The supplier is correct. The nominal code is wrong. A £340 electricity bill gets coded to telephone expenses. Motor vehicle costs end up in travel and subsistence. Office supplies land in marketing materials.

Coding errors don't break reconciliation in the traditional sense—the bank balance still matches the book balance. But they break something more important: the ability to trust your financial reports. Your profit and loss shows telephone costs up 40% while electricity is suspiciously low. Management makes decisions based on phantom trends.

The problem intensifies with bank feed auto-categorization. Software learns patterns: Shell stations get coded to motor expenses, which works until you fill up a company van at Shell and the transaction belongs in delivery costs instead. Amazon purchases default to office supplies, which fails when you buy £600 of computer equipment.

Client accounts magnify the issue. A multi-client practice codes a transaction to Client A when it belongs to Client B. The reconciliation balances because the total is correct, but Client A is overcharged and Client B is under-expensed. The error only surfaces when individual client reports are run.

8. VAT Errors

VAT mistakes rarely break the bank reconciliation. The amounts match, the dates align, but the VAT return is wrong. You claim input VAT on exempt supplies. You apply the standard rate to zero-rated goods. You forget to account for reverse charge on construction services.

Reverse charge errors are particularly common since the 2021 construction industry changes. A contractor receives an invoice for £10,000 of labour with no VAT charged, correctly, under reverse charge rules. They record it as a £10,000 expense. The error? They should also record £2,000 of output VAT (which they owe to HMRC) and £2,000 of input VAT (which they can reclaim). The net effect is zero, but both figures must appear in the VAT return. Box 6 especially gets forgotten—it seems illogical to declare outputs when you're recording a purchase.

Partial exemption creates another category of error. A business that makes both exempt and taxable supplies can only reclaim VAT in proportion to taxable turnover. Input VAT gets recorded at the full amount, then needs adjusting at quarter-end. Reconciliation shows the transaction as complete, but the VAT position is wrong.

The mundane errors are just as costly. Applying 20% to books (zero-rated). Failing to reclaim VAT on train tickets (standard-rated). Miscategorizing client entertainment (blocked) as staff subsistence (reclaimable). Each mistake is small. Over a year, they accumulate into four-figure adjustments.

9. Foreign Currency Mismatches

You invoice a European client €5,000. On the invoice date, the exchange rate is €1.17 to £1, making the invoice worth £4,274. The client pays three weeks later. The exchange rate is now €1.14 to £1. The bank receives £4,386. Your books show £4,274 outstanding.

The £112 difference is not an error—it's an exchange rate gain. But it breaks reconciliation because the amount on the bank statement doesn't match the amount in your invoicing system. The transaction needs a two-part entry: £4,274 applied to the invoice, £112 recorded as foreign exchange gain.

Currency losses create the inverse problem and are psychologically harder to accept. A £5,000 supplier payment initiated when the rate is favourable costs £4,850 when you budget for it. By settlement date, the rate has shifted. The bank deducts £5,090. You're £240 over budget, and the reconciliation shows an unexplained difference until you book the FX loss.

Multi-currency bank accounts introduce a third complication: revaluation. Your EUR account holds €20,000. At month-end, you revalue it to GBP for reporting. The balance was worth £17,094 last month; this month it's worth £17,544. Nothing moved. The exchange rate changed. Your accounts must reflect a £450 unrealized gain, or the reconciliation between your EUR statement and your GBP books will never balance.

10. Opening Balance Discrepancies

The opening balance is the foundation. If it's wrong, every subsequent reconciliation inherits the error. You start a new financial year with an opening bank balance of £12,340. The bank's closing balance from the prior period is £12,430. The £90 difference persists forever unless corrected.

The most common cause is unreconciled prior period transactions. The previous bookkeeper left outstanding items unresolved. You inherit them, copy forward the book balance, and assume it's correct. It's not—it includes cheques that never cleared, duplicate entries that were never removed, or bank charges that were never recorded.

Platform migrations are particularly vulnerable. You export from Sage, import to Xero, and bring forward the balance shown on the last Sage reconciliation. But that Sage reconciliation was never properly completed. Outstanding items were ignored. The balance was forced. Xero inherits the discrepancy, and you spend months trying to reconcile against a baseline that was corrupt from the start.

Manual adjustments create another failure mode. A prior period error is discovered—say, a duplicate transaction from four months ago. You correct it by posting an adjustment journal. The current month's transactions now reconcile perfectly. But the opening balance for the year is still wrong, because the adjustment affected the current period, not the opening position.