The most common reason cash doesn’t balance is missing transactions. A check gets written but never entered in your accounting software. A bank fee hits the account and nobody records it. A deposit gets made but sits in undeposited funds. Any transaction that happens at the bank but doesn’t show up in your books creates a gap.

Timing differences cause confusion too. You wrote a check on the 28th and recorded it that day, but it didn’t clear the bank until the 5th of the next month. If you’re comparing your book balance to your bank balance on the 1st, they won’t match. That’s normal. The reconciliation process exists to account for these timing differences.

Duplicate entries are another culprit. You enter a bill payment manually, then your bank feed imports it automatically, and now the same transaction exists twice. Your books show you paid $1,200 to a vendor when you actually paid $600 once. Double-counting expenses or income throws everything off.

Wrong amounts will cause an imbalance. Typing $540 instead of $450 creates a $90 discrepancy. Transposition errors are common and follow a pattern. If the difference divides evenly by 9, you likely swapped two digits somewhere.

Transfers between accounts get recorded incorrectly more often than you’d think. Moving money from checking to savings should show as money leaving one account and entering another. If only one side gets recorded, or if it gets recorded as an expense instead of a transfer, your cash balance is wrong.

Personal expenses running through business accounts create problems too. You use the business card for a personal purchase and don’t record it as an owner’s draw. Your books show more cash than the bank has because you never accounted for that money leaving.

To find the discrepancy, start with a bank reconciliation. Pull your bank statement and go line by line against your books. Mark off every transaction that matches. What’s left unmatched is where your problem lives. Look at deposits first since fewer transactions usually makes problems easier to spot. Then work through the payments.

Check your beginning balance. If it’s wrong, every reconciliation after that point will be off. This happens when prior period adjustments were made incorrectly or when starting balances were entered wrong during setup.

Reconcile more often. Monthly reconciliation means 30 days of transactions to sort through when something is wrong. Weekly reconciliation means you catch problems while you still remember what happened. Most cash balance issues come from waiting too long to check the numbers.

If your books have been off for months and you can’t figure out why, bookkeeping services exist for exactly this reason. Someone who does this daily will spot patterns and errors faster than you will. And once the books are clean, staying on top of small business bookkeeping weekly prevents the problem from recurring.