Glossary · Automated bank reconciliation
What is automated bank reconciliation?
Definition: Automated bank reconciliation compares bank transactions with accounting entries and matches them using set rules, without manual intervention.
Each day, the system collects statements for every account, in standard formats such as camt.053 or MT940, or directly through a bank connection. It then matches each transaction against outstanding invoices, receipts and payments according to rules: amount, date, reference and payer name. Those that match are reconciled automatically; those that do not are set aside for review.
For the finance team, it removes the mechanical work of matching transactions line by line and leaves people to analyse the differences. It gives a daily view of the real cash position, allows receipts to be allocated quickly, flags late payments earlier and means month-end close starts with most of the work already done. The same rules apply across several banks and entities.
The share of transactions reconciled automatically depends on data quality: incomplete references, bulk payments or partial receipts make matching harder. That is why it should be measured with your own data and the rules refined over time. A person is still needed for the exceptions. A good system records why each transaction was matched, which makes audits easier.
Example: a customer pays three invoices with a single transfer; the system identifies all three from their references, marks them as paid in the ERP and only leaves unreferenced transactions for review.