This article deals with the three basic types of bank balances when deciding which one to reconcile to in your books.

The three basic types of bank balances are:

1. Ending Collected Balance – the current balance in your ledger MINUS anything that has not cleared the bank account yet. Examples: deposits that have not been funded yet when presented for payment.
2. Current Posted Balance – simply put it is all transactions already in the “processed” stage. So, it will not include anything still in the “pending” stage. This may also include what is available for cash withdrawal.
3. Available Balance –this is the real-time balance that your bank determines how much money you have available right now at your disposal. This may change throughout the day as the bank recognizes what transactions are cleared, even if they seem to be in “pending” status still.

The realities are the Ending Collected Balance and the Current Posted Balance are probably going to be the same amount unless there was a long hold placed on something. The Available Balance is something you do NOT want to reconcile to in your books. Just because these funds are available, does not mean they have posted yet.

In this electronic world, you always only want to reconcile your books as of the Current Posted Balance. This makes it simple to separate what has officially posted in the bank and what is still pending. Still further, all official posted transactions will be everything through the previous business day. Even if something appears settled as of today, a good rule of thumb is to simply ignore it for reconciliation purposes until tomorrow.

So, in the end, for reconciliation purposes, always review ONLY the Posted Transactions when logging into your bank account online as this will tell you exactly what should be on your reconciliation report in your books.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.