Bank Reconciliation › Why the balance differs

Why the bank balance differs from your books

Most differences are timing, some are entries the bank made that you have not, and a few are mistakes. How to tell them apart.

Two kinds of difference

A difference between the books and the bank is not always a mistake. Most of it is timing: the same money reaches the books and the bank on different days.

Timing: in the books, not in the bank yet

• Cheques issued, not yet presented. The supplier may deposit your cheque days or weeks later. A cheque is valid for three months from its date; one not cashed for a long time needs a call to the payee.
• Cheques deposited, not yet cleared. Since 4 October 2025 cheques are cleared continuously through the Cheque Truncation System, so a cheque deposited in the day's session is often credited the same working day. Deposits made late on the last day of the month still show in the next statement.
• Cash deposited after the bank's cut-off time and shown on the next working day.

In the bank, not in the books yet

• Bank charges: SMS alerts, cheque book, NEFT or RTGS charges, minimum balance charges, annual card fees. GST is charged on bank fees; if the bank has your GSTIN, the GST can be claimed as input tax credit, so ask your bank for the GST invoice.
• Interest credited on savings or on fixed deposits linked to the account.
• Direct receipts: customers paying by UPI, NEFT or IMPS without telling you, or a cash deposit by a customer at another branch.
• Direct debits: loan EMIs, insurance premiums, NACH mandates, standing instructions.
• Bounced cheques: a cheque you deposited that came back unpaid, often with a return charge as well.

Mistakes

• An amount typed wrongly, for example 5,400 entered as 4,500 (a difference that divides by 9 often means two digits swapped).
• The same receipt entered twice, or a payment entered in the cash book instead of the bank.
• An entry in the wrong month, or a bank error (rare, but report it to the branch at once).