SHORT ANSWER · PROOF OF CASH
What is the difference between a proof of cash and a bank reconciliation?
A bank reconciliation agrees one number, the ending balance, between the bank and the books. A proof of cash agrees four: the beginning balance, receipts, disbursements and ending balance. So a bank reconciliation can tie while the money that moved during the month is wrong, and a proof of cash would show that difference in the receipts or disbursements column.
SIDE BY SIDE
How do the two compare, line by line?
They differ in how much of the month they test. A proof of cash is a bank reconciliation widened to cover the activity as well as the balances. Choosing a tool? See the best proof of cash software.
| Bank reconciliation | Proof of cash | |
|---|---|---|
| What it agrees | Ending balance only | Beginning, receipts, disbursements, ending |
| Amount columns | One | Four |
| Reconciling items | Open at month end | Open at both ends of the month |
| What it can miss | A receipt and a payment left out of the books in the same month | Very little, if the bank side is complete |
| Typical use | Monthly close | Audit and forensic work |
| Matter 25-117, March | Books 18,428.15 = bank 18,240.55 + 500.00 − 312.40 | Also receipts 8,620.00 and disbursements 5,094.20 |
Matter 25-117 is fictional. Both methods tie in March here because nothing was left out. The proof of cash just checks more of the month.
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WHICH ONE
When is a bank reconciliation not enough?
When someone could take money in and pay it out without either reaching the books. The ending balance still agrees, so a balance-only check looks clean. That gap is why auditors use a proof of cash.
Both methods trust the bank row. If a statement is missing a page, both are reconciling to the wrong number. ZeraBooks proves each statement to its printed closing balance before either one starts. The worked steps are on how do you do a proof of cash?
Is a proof of cash the same as a four-column bank reconciliation?
Yes, those are two names for the same thing. The four columns are the beginning balance, receipts, disbursements and ending balance.
Does a proof of cash replace the monthly bank reconciliation?
No. Most teams keep the monthly reconciliation for the close and run a proof of cash when the receipts and payments themselves need testing.
Which takes longer?
The proof of cash, because it needs totals for the month and items open at both ends. With the bank side already proven, most of the extra work is on the books side.
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Check the whole month,
not just the last day.
ZeraBooks proves every statement so both columns of the bank side are right before you reconcile.