Current Account Statements: How to Read and Understand Your Bank Statement

Current account statements are essential financial documents that provide a detailed record of your business transactions. Understanding how to read these statements is crucial for effective financial management and accurate bookkeeping.

a) Anatomy of a Current Account Statement

A typical current account statement contains several key elements:

1. Account information

2. Statement period

3. Opening and closing balances

4. Transaction details

5. Summary of fees and charges

b) Decoding Transaction Details

The transaction section of your statement includes:

1. Date of each transaction

2. Description or narration of the transaction

3. Debit and credit amounts

4. Running balance after each transaction

c) Understanding Account Balance Types

Your statement may show different types of balances:

1. Available balance: Funds you can immediately access

2. Ledger balance: Total balance including pending transactions

3. Overdraft limit (if applicable)

d) Reconciling Your Statement

To ensure accuracy:

1. Compare your statement with your own financial records.

2. Check for any discrepancies or unfamiliar transactions.

3. Verify that all deposits and withdrawals are correctly recorded.

e) Analysing Your Financial Activity

Use your statement to gain insights into your business finances:

1. Track cash flow patterns.

2. Identify major income sources and expenses.

3. Monitor recurring charges and subscriptions.

f) Utilising Statement Information for Business Planning

Your account statement can help you:

1. Make informed budgeting decisions

2. Forecast future cash flow

3. Identify areas for cost reduction or revenue improvement

g) Digital Statement Features

Many banks now offer digital statements with additional features:

1. Searchable transactions

2. Categorized expenses

3. Downloadable data for accounting software integration