Reconciliation
Reconciliation is the process of comparing what a ledger says a bank account holds to what the real bank or card statement says, as of the same date, to prove the books are accurate.
In short
Proving the books match reality, not just assuming it. Supply an account, a date, and the statement's ending balance in the ledger's own sign convention, and BalanceMCP reports whether they agree — and if not, whether uncategorized transactions in that account explain the gap.
Also called: reconciling an account, bank reconciliation
Reconciliation means proving that the books agree with reality — comparing the balance a ledger says an account holds, as of a given date, to the balance a real bank or credit card statement says it holds on that same date. When the two match, that's real evidence the records are accurate, not just an assumption. When they don't, reconciliation is what surfaces a problem before it compounds.
It catches the ordinary, easy-to-miss stuff: a transaction that never got categorized, a bank fee that slipped by, something entered twice, a typo in an amount. Caught the same month, any of these is a quick fix; left for a quarter, the same small error gets buried under a hundred other transactions.
The sign convention trips people up more here than almost anywhere else in BalanceMCP: enter a checking or savings statement balance normally, but a credit card's balance needs to be entered as negative, since the ledger records money owed as negative regardless of how the statement prints it. BalanceMCP recognizes the specific signature of this exact mistake and says so directly, rather than leaving a confusing, doubled-looking discrepancy unexplained.
Reconciling multiple accounts in the same book means reconciling each one separately, against its own statement — a discrepancy on a credit card doesn't say anything about whether checking is right. Doing this regularly, ideally whenever a new statement arrives, is what keeps it a light monthly habit rather than an occasional forensic exercise, and it's the step that should come before locking a period closed.
What people get wrong
- Entering a credit card's ending balance as positive instead of negative — the ledger's convention treats money owed as negative regardless of how the statement prints it.
- Treating a perfectly matching reconciliation as proof nothing needs attention — uncategorized transactions can still be sitting in the account even when totals agree.
- Reconciling irregularly instead of monthly — the value comes largely from catching small errors before they're buried under later activity.
Common questions
- How often should I reconcile?
- Monthly, ideally right when each statement becomes available, and before locking that period closed. A small discrepancy caught the same month is a quick fix; the same one found later takes real digging.
- What if the totals match but there are still uncategorized transactions?
- Review them anyway — a matching total doesn't guarantee nothing's wrong. An unrelated error elsewhere could be quietly offsetting an uncategorized transaction.
Machine-readable: /api/knowledge/concept:reconciliation