Reconciling loan balances typically involves verifying that the balances recorded in your financial statements match the balances reported in your Accounting program. Here are some steps you might consider:

1. Gather Statements: Collect all relevant loan statements from lenders, including any recent transactions, interest charges, and payments.

2. Compare Balances: Compare the loan balances on your financial statements or loan reports with the balances on the lender's statements. Ensure that all transactions have been recorded accurately.

The loan report provided by AgExpert will be very helpful for this task. It shows your opening balances, payments applied to the loan and the balance at the end of the reporting.

Click Reports, type Loan in the search box

Select your options, a detailed report will provide a list of all payments applied to your loans.

3. Identify Discrepancies: If there are discrepancies, identify the cause. This could be due to timing differences, unrecorded transactions, or errors in recording.

4. Adjust Entries: Make necessary adjustments to your financial records to correct any discrepancies. This may involve recording missed transactions or correcting errors.

It is good practice not to wait until the end of the year to reconcile your loans. Doing this at the end of every quarter for instance will help spot mistakes faster and fix them early enough.

One of the most common mistakes is applying full payments to the loan and not breaking down the principal and the interest portions.

As an example, we identified that the payment made on 03-02-2024 for $3270, applied to the 25year term land mortgage, included $500 in interest and when looking at our loan statement, we also notice that our loan balance at the end of March 2024 should’ve been $2,745,530. The correcting journal entry would like this:

Once recorded, our loan balance in Accounting matches our loan statement. The loan is now reconciled.

Do the same for all your loans at the end of your fiscal year to make sure your year-end loan balances on the Balance Sheet reflect the correct numbers.

5. Documentation: Keep detailed documentation of the reconciliation process, including any adjustments made and the reasons for those adjustments.

Last updated on June 27, 2025 by FCC AgExpert