In many companies the bank reconciliation is the last task of the close, done quickly by whoever has time, with a small difference posted to a suspense account so that the numbers agree. That is the reconciliation as a chore. Treated as a control, the same exercise is the most direct evidence a company has that its cash records are complete and real.
Why is bank reconciliation a control?
The bank statement is evidence produced by a third party. Comparing it with the ledger tests two things at once: that every movement on the statement is recorded, which catches unrecorded payments, charges and receipts; and that every payment and receipt in the ledger actually went through the bank, which catches entries that never happened. Few other controls give independent evidence so cheaply.
How often should you reconcile?
At least monthly, for every bank account, including dormant accounts and accounts in foreign currency. For operating accounts with frequent movements, weekly is better, and where statements arrive in Odoo every day, daily matching is realistic. The reason is practical: an error found within a week is easy to trace, because the people involved remember the transaction. One found three months later is an investigation.
What counts as a reconciling item?
A reconciling item is a legitimate timing difference between the bank and the books, with a known cause and an expected clearing date:
- Outstanding payments: cheques issued or transfers recorded but not yet cleared by the bank.
- Deposits in transit: receipts recorded in the books but not yet credited on the statement.
- Bank charges, interest and fees on the statement that have not yet been recorded.
- Errors by the bank or in the ledger that have been identified and are being corrected.
Each item should have a description, an owner and an age. Items older than a period set in the close procedure, for example thirty days, are escalated: a cheque that has not cleared for months may be lost, cancelled or misused, and a deposit that never arrives is a receivable, not cash.
What do you do with an unexplained difference?
Nothing that makes it disappear. An unexplained difference means the reconciliation is not finished, however small the amount. Posting it to a suspense or rounding account hides the very thing the control exists to find, and a small difference can be the visible part of a larger pattern. The difference stays open, is investigated, and is reported to the reviewer with what has been done so far.
A reconciliation that always balances on the last day, with a small adjustment, has not been reconciled. It has been closed.
How does Odoo help?
Odoo imports bank statements from files or, depending on the edition and the bank, through a direct bank feed, and presents each statement line for matching against open invoices, bills and payments. Reconciliation models automate the routine: a rule can match lines to open invoices by reference or partner, or propose a counterpart entry for recurring items such as bank charges, and it can either suggest the match or apply it automatically. Automation belongs only on items that are genuinely routine, and the rules themselves need review, because a badly written model reconciles the wrong things silently.
Lock dates matter here too. Once a period is reconciled and reviewed, locking it prevents back-dated entries from changing a balance that has already been agreed to the bank. When MFT runs an Odoo implementation, the statement import, the reconciliation models and the lock-date procedure are configured and tested with the finance team before the first close.
Who should review it?
Someone who does not create or release payments, and who is senior enough to ask questions. In a small company that is usually the owner or general manager. The review is evidenced: the reviewer agrees the closing balance to the statement, reads the list of reconciling items and their ages, asks about anything old or unusual, and signs and dates the reconciliation. Without that step, the reconciliation tells the company only what the preparer chose to show.