Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
The bank reconciliation agrees during the month but shows differences at month-end.
Separate cut-off items into those the bank has not yet processed, which stay as timing items in the reconciliation, and those the bank has already posted but the books have not, which need entries, such as last-day charges and interest.
The last week's cheques issued and deposited, the bank statement up to month-end and the first days of the next month, and a running list of open items.
Each month-end difference is either listed as a timing item that clears next month or booked as an entry, and the reconciliation agrees.
Month-end differences come from cut-off. Entries you make in the last few days of the month often reach the bank only in the next month, and the bank posts some items, such as quarterly charges and interest, on the very last day before you have entered them. Mid-month these effects are small. At month-end they all land at once.
Cut-off simply means where you draw the line between one month and the next.
What usually causes the month-end gap?
| Last-week item | Why the dates differ | Treatment |
|---|---|---|
| Cheque deposited on the 30th or 31st | Clearing takes typically one or two working days | Timing item: deposit in transit |
| Cheque issued in the last week | The supplier has not presented it yet | Timing item: outstanding cheque |
| NEFT payment made late on the 31st | It may be processed in a later batch or the next day | Timing item, check the statement date |
| Bank holiday or weekend at month-end | Clearing pauses | Timing item |
| Quarterly or monthly charges on the last day | The bank posts them before you see the statement | Pass an entry in the books |
| Interest credited or debited on the last day | Same as charges | Pass an entry in the books |
A deposit in transit is money you have deposited that the bank has not yet credited; see what is a deposit in transit.
Which date decides the month?
Several dates can apply to one transaction:
- Voucher date: the date you enter in your books.
- Cheque date: the date written on the cheque.
- Transaction or posting date: the date the bank records it in your statement.
- Value date: the date from which the bank treats the money as available, used for interest.
In your books, record the transaction when it happens for your business, for example when you hand over a cheque. The bank will record it when it processes it. The gap between the two is exactly what the bank reconciliation statement explains. Do not change your voucher dates to match the bank just to make month-end look clean.
Worked example
On 30 March you deposit a customer cheque for ₹92,000 and enter the receipt the same day. The bank credits it on 2 April. In the March reconciliation this is a timing item: a deposit in transit. No entry is needed. It will appear in April’s statement.
On 31 March the bank debits quarterly account charges of ₹1,300 plus GST at 18 percent, which is ₹234. The total debit is ₹1,534. Your accountant sees it only on 3 April and enters it then.
This item is different. The bank has already posted it in March, so it belongs in March’s books. Enter ₹1,300 to bank charges and ₹234 to GST input, dated 31 March. If you leave it in April, your March books overstate the bank balance by ₹1,534.
How do you stop the same items causing a gap every month?
Keep a simple open-items list with four columns: date, description, amount and the date it cleared. At each month-end, add the new timing items. At the start of the next month, tick off the ones that appeared in the statement.
Anything still open after a few weeks needs attention, not another month on the list. The next article covers how to clear those.
What mistakes should you avoid?
- Back-dating April bank charges into March without checking the statement date. Only items the bank posted in March belong in March.
- Waiting for every cheque to clear before closing the month. Timing items are normal; list them and close.
- Forgetting quarter-end. Some charges and interest are posted only at the end of each quarter, so a quarter-end month can look worse than others.
What to read next
Next, read why some items stay unreconciled for months, and how to clear them. For the full monthly routine, see the Days 1 to 5 runbook, and for the wider close, the month-end close checklist.
TransactIG matches bank statement lines to the books and carries open items forward in an exception queue with audit-ready exports; see bank reconciliation software for India.