Balance Sheet Reconciliation: Tips & Best Practices for Enterprises

For enterprises, maintaining financial integrity extends far beyond simply ensuring compliance. Having accurate and reliable financials also fosters strategic decision-making, establishes stakeholder trust, and provides a company with a roadmap towards long-term success.

And at the heart of this endeavor lies balance sheet reconciliation: an essential process that ensures a company’s financial statements are trustworthy and reflect reality. Without this, companies may run into reporting errors, misinformed decisions, or even costly regulatory penalties.

As experts in helping organizations build a reliable financial foundation for growth, we’ve outlined some essential tips and best practices for enterprises looking to establish balance sheet reconciliation success and efficiency.

What is Balance Sheet Reconciliation, and Why is it Important for Enterprises?

Balance sheet reconciliation involves comparing financial records to supporting documents such as bank statements, invoices, and ledgers with the goal of identifying and resolving any issues or inaccuracies.

For enterprises in particular, balance sheet reconciliation is essential for ensuring financial transparency, establishing compliance, and developing strong internal controls. As enterprises typically have complex financial environments with high transaction volumes and multiple revenue streams, even the smallest of issues can snowball into significant financial misstatements.

For a more detailed look into the basics of balance sheet reconciliation, head to our blog: Balance Sheet Reconciliation: Definition, Importance, & How-to.

Balance Sheet Reconciliation: Tips and Best Practices for Success

Identify which accounts need to be reconciled
Compile account information
Compare general ledger data to supporting documents
Investigate inconsistencies and resolve errors or areas for improvement
Make adjustments to the general ledger as needed
Finalize the balance sheet reconciliation process and ensure everything is documented

1. Identify which accounts need to be reconciled

Not every account needs to be reconciled each month. However, critical accounts – such as cash and bank accounts, accounts receivable, accounts payable, fixed assets, and several others – should be reviewed on a consistent basis.

The frequency in which an enterprise needs to conduct balance sheet reconciliation for specific accounts will vary depending on the account, but for example, cash accounts should be reconciled on a monthly basis to ensure liquidity and prevent fraud.

2. Compile account information

After the accounts have been identified, it’s essential to ensure you have all the necessary documentation readily available, including:

General ledger account information

Bank statements and financial reports

Invoices, receipts, and records of payment

Supporting schedules for certain accounts (such as fixed assets)

ERP system reports for transaction tracking

For best results, use a centralized document repository or implement reconciliation software to streamline the process and reduce the potential for human error.

3. Compare general ledger data to supporting documents

It’s critical to double-check any balances recorded in the general ledger with both internal and external records to identify missing transactions, duplicate entries, and any timing differences that might be causing discrepancies.

For example, a bank statement might show an outgoing payment that has yet to be recorded in the general ledger. Identifying and addressing these differences promptly ensures the integrity of financial reports.

4. Investigate inconsistencies and resolve errors or areas for improvement

After identifying discrepancies, it’s essential to identify exactly where they’re coming from. To effectively resolve these discrepancies, you will likely need to communicate across internal departments, vendors, or banking institutions.

Resolving these discrepancies as quickly as possible is essential for reducing risk.

Common balance sheet discrepancies:

Timing differences, such as outstanding checks or pending deposits

Data entry errors, such as transposed numbers or incorrect dates

Missing or duplicate transactions

Exchange rate variances (for multinational enterprises)

5. Make adjustments to the general ledger as needed

After identifying the source of the discrepancies, it’s essential to make the necessary adjustments. Whether this involves correcting misclassified transactions, recording previously omitted transactions, or adjusting accruals and deferrals, every adjustment must be documented thoroughly with supporting evidence to maintain a clear audit trail.

6. Finalize the balance sheet reconciliation process and ensure everything is documented

Maintaining detailed documentation is crucial for compliance, audit readiness, and accurate tracking – so as the last step in the balance sheet reconciliation process, be sure to confirm that the ending balance in general ledger matches all supporting records.

For best results, develop a summary report that outlines reconciled accounts, identified discrepancies, any adjustments made, the final balance, and information on approvals and signoffs. You may also want to consider integrating reconciliation tools with your chosen ERP in order to save time while ensuring accuracy.

Final Thoughts on Balance Sheet Reconciliation Tips and Best Practices for Enterprises

For large enterprises, operational complexity often make balance sheet reconciliation time-consuming and prone to human error. However, a financial consulting firm like DLC can provide:

Expertise in enterprise reconciliation best practices

Automation and ERP integration solutions

Risk mitigation strategies

Compliance and audit readiness support

Temporary or long-term financial staff augmentation

Need assistance with balance sheet reconciliation?

At DLC, we help enterprise organizations strengthen financial integrity through expert balance sheet reconciliation support. Our team ensures your financial records are accurate, compliant, and optimized for strategic decision-making.