Balance Sheet Reconciliation: Process, Steps, and Best Practices

Your finance team finished processing vendor statements by 7pm on day three of close. The general ledger reconciliations still have not started. When auditors ask for evidence that balance sheet accounts were reconciled and approved before the financial statements were finalised, you hand them a folder of spreadsheets with unclear version histories, disconnected supporting documents, and manual adjustments. That creates unnecessary risk, delays the close, and weakens financial control.

Balance sheet reconciliation verifies that every balance in your general ledger is accurate, supported, and properly reviewed. Cash-related balances need to be substantiated. Accounts receivable must tie back to the subledger. Fixed assets must align with the asset register. Accruals, prepayments, intercompany balances, and other control accounts all need to be checked and approved. When they do not align, finance teams are left with errors in the financial statements, audit risk, or both.

For many organisations, reconciliation takes up a significant share of the month-end close, yet much of that work is still managed in spreadsheets outside SAP. That creates delays, weakens accountability, and makes it harder to prove that balances were reviewed properly before reporting deadlines. Standard SAP supports core finance processes, but balance sheet reconciliations are often still handled outside the system.

What balance sheet reconciliation actually means

Balance sheet reconciliation compares the balances recorded in the general ledger against supporting documents or comparable balances for each balance sheet account. The supporting record depends on the account type. For receivables, it may be the subledger. For fixed assets, it is the asset register. For accruals and prepayments, it may be a schedule or other supporting documentation.

The process confirms that the GL balance is accurate, that transactions have been recorded correctly, and that the account is properly supported. It also helps identify differences that need to be explained before closure.

Bank reconciliation and balance sheet reconciliation are closely related, but they cover different activities. In SAP, bank reconciliation usually refers to loading and matching bank statements to bank accounts through standard SAP functionality. Balance sheet reconciliation covers all balance sheet accounts, including the month-end review of bank-related GL balances as part of the wider financial close.

Why balance sheet reconciliation matters

Balance sheet reconciliations need to be completed before financial statements can be finalised with confidence. If they are incomplete, finance teams cannot be sure whether reported balances are correct, supported, or still carrying unresolved issues from prior periods.

That creates risk for audit, management reporting, and decision-making. Reconciliation helps detect posting errors, identify unusual balances, confirm that documentation exists, and make sure unresolved items are visible before they become long-standing problems.

The balance sheet reconciliation process

The process is broadly similar across account types.

First, identify which accounts need to be reconciled, how often they should be reviewed, and who is responsible for them. Higher-risk accounts such as accruals, prepayments, intercompany balances, fixed assets, control accounts and bank-related balances are often prioritised during month-end close.

Next, gather the supporting information. This may include general ledger balances, subledger reports, asset reports, schedules, prior-period reconciliations, notes, and attachments. The support needs to cover the same period as the balance being reviewed.

Then prepare the reconciliation by showing the closing GL balance, the supporting or comparable balance, and any reconciling items that explain differences.

Any discrepancies then need to be investigated and explained. Some may be expected timing differences, while others may point to posting errors, missing entries, unsupported balances or items that need escalation before close.

Once prepared, the reconciliation must be reviewed and approved. This is one of the key control points in the process. A stronger approach keeps the balances, supporting evidence, notes, attachments, and approval record together, rather than scattering them across spreadsheets, folders, and emails.

The final step is to retain the completed reconciliation and its supporting history in a way that can be reviewed later. That includes the reconciliation itself, notes, attachments, approval status, and audit history.

Common challenges in manual balance sheet reconciliation

Manual reconciliation processes are slow, inconsistent, and difficult to audit. Version control is often weak. Supporting documents may be stored outside SAP. Review comments may sit in emails rather than alongside the reconciliation itself. Managers may have limited visibility of which reconciliations are complete, which are waiting for approval, and which are overdue.

This creates inefficiency, weakens control, and makes it harder for finance teams to maintain a single reliable view of progress.

How to improve balance sheet reconciliation

The goal is to make the process more controlled, visible, and consistent.

That starts with standardisation. Teams should prepare reconciliations in a consistent format so reviewers know what to expect. It also requires better visibility, so managers can see which reconciliations are in progress, which are delayed, and which items may create risk at close.

For SAP teams, one of the biggest improvements often comes from bringing reconciliations back into the ERP, keeping supporting evidence with the reconciliation itself, and managing approvals in a more structured way. That supports stronger accountability, clearer audit history, and better month-end oversight.

Bringing balance sheet reconciliation back into SAP

For organisations that still manage balance sheet reconciliations in spreadsheets or outside the ERP, a more controlled in-SAP approach can improve visibility, consistency, and audit readiness.

BEST Balance Sheet Recons supports that by helping teams manage reconciliations inside SAP with structured approval workflows, stored attachments, month-end visibility, audit trail reporting, and a clearer process for reviewing and finalising reconciliations. It is designed to strengthen control over balance sheet accounts and reduce reliance on off-system files and email-based approvals.

How BEST supports balance sheet reconciliation in SAP

Many of the challenges mentioned come from managing reconciliations outside SAP. Spreadsheets, email approvals, and separately stored supporting documents make the process harder to control, review, and audit.

Standardised reconciliations

BEST Balance Sheet Recons helps teams prepare reconciliations directly in SAP using a more consistent process. It supports categorisation, balancing, and checking, helping reduce manual effort and improve consistency across accounts.

Better visibility at month-end

A central recon hub gives finance teams a clearer view of month-end progress. It helps identify anomalies, track outstanding reconciliations, and support follow-up through notifications and escalations.

Controlled approvals and audit trail

Review and approval are managed within SAP, with checks to make sure key controls are met before sign-off. Reconciliations, notes, and supporting documents are stored in SAP, creating a full audit trail and making it easier to respond to audit queries.

Stronger balance sheet control

By keeping reconciliations, approvals, and supporting evidence inside SAP, BEST helps finance teams improve visibility, consistency, and control across the balance sheet reconciliation process.

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