What Is Bank Reconciliation?

Bank reconciliation is the process of comparing your company's internal financial records against bank statements to confirm they match, and investigating any differences. It's one of the most routine and time-consuming tasks in finance, and one of the most important: unexplained discrepancies signal errors, missed transactions, or fraud.

Why Bank Reconciliation Is Hard

• Timing differences: payments recorded internally haven't cleared the bank yet

• Volume: high-transaction businesses match thousands of entries per period

• Multiple accounts: each entity runs reconciliation separately

• Format inconsistencies: bank data arrives in different formats (BAI2, MT940, CSV)

How Automated Bank Reconciliation Works

Automation replaces manual matching with machine learning. The system learns how bank statement transactions correspond to ledger entries and applies matching rules automatically at scale. Exceptions are flagged for human review; everything else is matched and posted without manual intervention.

Palm uses machine learning to transform bank reconciliation from a manual burden into an intelligent, mostly automatic process.

Related Terms: Cash Visibility | Real-Time Cash Position | Treasury Management System | Cash Variance Analysis