Bank statement

What it means

A bank statement is the bank’s record of every movement on an account for a period, opening and closing balance included. In bookkeeping it is a full accounting document - a payment without a statement is merely a claim.

Each line is matched to the reason for the payment: settling an invoice, wages, contributions, a fee. That matching is what ties cash movements to the sub-ledger and shows which receivables are genuinely paid.

A statement is not the same as the payment confirmation internet banking produces. An entered order may not have been executed yet, the bank may reject or postpone it, and only the statement proves that the money really left and when. Likewise a standing order is just an instruction: whether it ran in a given month only the statement shows.

How it works in practice

We pull statements monthly, ideally straight through the bank’s API or in a format the accounting software reads. Automatic matching on the variable symbol saves the most time and exposes payments with no document behind them.

On foreign-currency accounts the statement also drives FX differences: the amount is translated at the statutory rate and the gap against the original invoice becomes income or cost.

At the monthly close we check that the closing balance on the statement agrees with the bank account balance in the trial balance. A difference means a missing statement, a movement posted twice or a transfer between own accounts recorded on one side only. Until the difference is explained we do not treat the month as closed.

What to watch out for

The commonest inspection finding is a movement with no document behind it, or a cash withdrawal without a cash document. Such an item is usually treated as a non-deductible expense, or as a benefit in kind for the director.

The second trap is private spending from the company account. The director pays for a personal purchase with the company card and sends nothing to the accountant, so the movement is booked as a receivable from the director. Such a balance grows year after year, nobody repays it, and in the statements it weakens the company’s creditworthiness and the bank’s view of its management.