Why QuickBooks Online doesn’t match your bank, and how to find out which reason is yours

What "matching the bank" actually means

Reconciling is checking QuickBooks against the statement your bank sends you, one transaction at a time. In QuickBooks Online it lives under the Gear icon, then Reconcile (newer screens put it under Accounting). You tick each transaction that appears on the statement, and Intuit is plain about where you should end up:

When all transactions are marked, the Difference should be CA $0.00.

Intuit Canada, Reconcile an account in QuickBooks Online.

When it is not, work down the list below. The first two explain most of what we see in small-business files.

1. Timing: it is in QuickBooks but has not reached the bank yet

A cheque you wrote on the 30th that the supplier deposits on the 4th is real, and belongs in your books for the 30th, but it is not on this month's statement. Intuit's instruction is simply to leave it alone: "If a transaction in QuickBooks isn't on your statement, don't check the box." Intuit lists it first among the reasons a reconciliation will not close: "Someone entered transactions into QuickBooks that haven't cleared your bank yet."

Timing is the one cause that is not an error. Left unticked, these items do not count against the $0.00. They simply carry over, and they should clear next month. A cheque still sitting there three months later is worth a phone call.

2. Duplicates from the bank feed

The bank feed is the most useful thing in QuickBooks Online and the most common source of doubled numbers. The pattern is always the same: somebody entered an invoice payment or a bill by hand, then the same money arrived in the feed and was added as new instead of matched to what was already there. Intuit's matching guidance exists to stop exactly this, so that "you don't create a duplicate entry."

Intuit's fix depends on how far the duplicate got:

• Still in the feed, not yet added: exclude it. "If a downloaded transaction is a duplicate of one you already recorded in your books, excluding it makes sense."
• Already added or categorized: "Select Undo. This moves the transactions back to the Pending tab." Then match it to the original instead.

3. Payments that were never grouped into a deposit

Five customer cheques taken to the bank together appear on the statement as one deposit. Intuit's own example: "Your bank records all five checks as one CA $500 deposit." If QuickBooks records those five payments separately, it shows five deposits where the bank shows one, and as Intuit puts it, "your records won't match the bank."

The fix is to hold the payments in the Undeposited Funds account and combine them into a single deposit that mirrors the bank: "If your bank combined several payments as a single record, you should do the same in QuickBooks." The account can be renamed, so if you cannot find it, look for the detail type Undeposited Funds.

4. Someone changed a transaction you already reconciled

This is the one that makes last month's beginning balance wrong. Intuit lists the usual culprits as "A reconciled transaction that was edited, deleted, voided, moved, or unreconciled," and adds two more: a categorized bank feed transaction that was undone, and a transaction dated before your last reconciliation that was reconciled manually.

QuickBooks flags it for you. The reconcile screen shows "Your account isn't ready to reconcile yet. Your beginning balance is off by…" and offers "We can help you fix it," which opens a report of what changed. One gap worth knowing: deleted and voided transactions do not appear there. For those, Intuit says to go to Settings, then Audit log, filter to the account and the period since your last completed reconciliation, and look for them.

5. The opening balance was wrong from the start

If the account has never reconciled cleanly, look at day one. Intuit notes that when you connect a bank account, QuickBooks downloads historical transactions and enters the opening balance for you, and also that "Sometimes, the opening balance doesn't include transactions that were still pending when you created the account." An incorrect opening balance is also on Intuit's list of reasons a beginning balance is off.

6. Bank fees and charges nobody recorded

Monthly fees, card processing fees and interest appear on the statement and nowhere else until someone enters them. Intuit's instruction: "Enter any transactions that you see on your bank statement but not in QuickBooks as new sales receipts or expenses." Fees can also hide inside other transactions: "Sometimes, banks add fees to transactions that weren't included when you originally entered it into QuickBooks." Record the fee on its own rather than editing the original payment.

Where to start

1. If QuickBooks says your beginning balance is off, start with cause 4. Nothing after it will balance until it is fixed.
2. If the account has never reconciled, start with cause 5.
3. Otherwise, compare deposits first (causes 2 and 3), then look for fees (cause 6). What is left unticked should be timing (cause 1).

Most months, that order turns an afternoon of hunting into twenty minutes.