Bank reconciliation is where bookkeeping meets reality — it's the step that checks whether what your books say happened actually matches what your bank says happened. That check is only as good as the discipline behind it, which is why the rules here are less about clever categorisation and more about making sure the evidence itself can't quietly move.
The bank feed is append-only
Once a transaction lands from your connected bank feed, it isn't edited or deleted. If it shouldn't be counted as income or expense — a transfer between your own accounts, for instance — you exclude it, with a reason recorded, rather than removing it. The raw fact "this is what the bank reported, on this date, for this amount" stays untouched forever; only your interpretation of it (which category, which invoice it settles, whether it counts at all) can change.
This matters because a bank feed is your closest thing to ground truth. If the underlying evidence could be silently edited, "reconciled to the bank" would stop meaning anything — you'd be reconciling to your own edited version of the bank's data, not the bank's actual record.
One bank line, one live journal link
A given bank transaction connects to at most one live journal entry at a time. That single rule is what stops the same real-world payment being counted twice — categorised as an expense directly, and then separately matched against a bill as a payment, for instance, silently doubling it in your books. If how a transaction should be treated changes — you realise it actually settles an invoice rather than being a standalone expense — the old link is retired before the new one is created, not left sitting alongside it.
A payment allocation is checked against what it's actually settling
When a payment is applied to an invoice or bill, that allocation is recorded explicitly and checked against the document it's applied to — not simply assumed to fully clear whatever it's pointed at. This is what makes partial payments, part-paid invoices, and payments that get split across two invoices behave correctly: each allocation is its own recorded fact, not an all-or-nothing flag on the document.
Reconciliation sign-off is a snapshot, not a checkbox
Ticking a bank account off as reconciled is the easy part; the part that matters is what that sign-off actually preserves. Reconciling in ac-co creates a durable, item-level record of exactly what matched the bank statement at that moment — not a single "reconciled: yes/no" flag that stops meaning anything the moment something upstream changes. That snapshot is what lets you (or your accountant, or an auditor) come back later and see exactly what was true when you signed off, rather than a status that's quietly been overtaken by later edits elsewhere in the books.
Why this is worth caring about even when it's automatic
Most bank reconciliation software puts the emphasis on speed — how quickly it can auto-match transactions and get you to a green checkmark. That's a reasonable thing to optimise, but it's a different goal from making the reconciliation trustworthy once you've got there. A fast match built on evidence that can quietly change later, or a link that silently gets reused for a second transaction, gets you to "reconciled" just as quickly as a sound one does — the difference only shows up when someone actually needs to rely on it, by which point the underlying data may have already moved.
That's the reasoning behind treating the bank feed itself as append-only rather than editable, and behind capping each bank line at one live journal link rather than trusting the categorisation step to never double up. Neither rule makes reconciliation faster. Both make it mean something once it's done.
What this looks like day to day
Most of your bank feed will auto-categorise itself correctly, and you'll spend your time on the handful of transactions that need a human decision — which invoice this payment settles, whether that direct debit is genuinely a business expense. What you won't run into is a transaction silently counted twice, or a reconciliation that quietly stopped matching reality without telling you. If you want to see how a VAT-registered business's numbers connect to what actually reconciles day to day, our VAT calculator is a useful next stop — and VAT, FX & reports covers how reconciled bank data feeds into your VAT return.