Bank Statement Glossary

The terms are grouped into four sections: balances and statement structure, transaction types, payment methods, and account identifiers and codes. Use the headings to jump to the area you need.

Balances and statement structure

Reconciliation

Reconciliation is the process of comparing two records of the same transactions — typically a bank statement against an accounting ledger — to confirm they agree and to identify any differences. A bank reconciliation is complete when the opening balance, every transaction in the period, and the closing balance all line up. See the guide on how to reconcile bank statements for a step-by-step method.

Opening balance

The opening balance is the amount of money in an account at the start of a statement period, before any transactions in that period are applied. The opening balance of one statement should equal the closing balance of the immediately preceding statement; a mismatch signals a missing or misdated transaction. The guide on opening balance vs closing balance explains how the two relate.

Closing balance

The closing balance is the amount of money in an account at the end of a statement period, after every transaction in that period has been applied. The closing balance equals the opening balance plus all credits minus all debits for the period, and it becomes the opening balance of the next statement.

Running balance

A running balance is the account balance recalculated after each individual transaction, showing the cumulative total as it changes line by line down the statement. Checking the running balance after every entry is the most reliable way to spot a missing or misread transaction, because the first row where your figure diverges from the bank's running balance column is where the error sits.

Statement period

A statement period is the span of time, defined by a start date and an end date, that a single bank statement covers. Transactions are listed within this window only, and the period's closing balance carries forward as the opening balance of the next period. Overlapping or gapped statement periods can cause transactions to be double-counted or omitted during reconciliation.

Transaction types

Debit

A debit on a bank statement is an entry that decreases the account balance, such as a payment, withdrawal, card purchase or transfer out. On a personal or business current account, debits are amounts leaving the account. The term reflects the customer's view of the statement; in double-entry bookkeeping the same movement may be recorded differently depending on the account.

Credit

A credit on a bank statement is an entry that increases the account balance, such as a deposit, incoming transfer, refund or interest received. On a current account, credits are amounts coming into the account. As with debits, the statement uses the account holder's perspective, which can differ from the debit/credit convention used in a ledger.

Payment methods

BACS

BACS is a UK electronic payment system used for bulk and recurring transfers such as salaries, supplier payments and direct debits, processing payments over a three-working-day cycle. BACS payments are typically lower cost than same-day methods and are suited to scheduled, non-urgent transfers. The name derives from Bankers' Automated Clearing Services.

CHAPS

CHAPS is a UK same-day, high-value electronic payment system used for time-critical or large transfers such as property purchases and business settlements. CHAPS payments settle on the same working day if submitted before the daily cut-off, and usually carry a higher fee than BACS or Faster Payments. The name stands for Clearing House Automated Payment System.

Faster Payments

Faster Payments is a UK electronic payment system that transfers money between accounts typically within seconds and is available at any time, including weekends. Faster Payments is commonly used for online and mobile banking transfers up to a per-transaction limit set by the sending bank. It sits between BACS (slower, scheduled) and CHAPS (same-day, high-value) in everyday use.

Direct debit

A direct debit is an instruction that authorises an organisation to collect variable or fixed amounts from a payer's bank account on agreed dates. The payee initiates each collection, which makes direct debits common for utility bills, subscriptions and loan repayments. In the UK, direct debits are protected by the Direct Debit Guarantee, which entitles payers to a refund of payments taken in error.

Standing order

A standing order is an instruction from an account holder to their bank to pay a fixed amount to the same recipient at regular intervals, such as monthly rent or savings transfers. Unlike a direct debit, a standing order is controlled by the payer, who sets the amount and schedule, and the bank sends the same sum each time until the instruction is cancelled or amended.

Account identifiers and codes

Sort code (UK)

A sort code is a six-digit number that identifies a specific bank and branch within the United Kingdom and Ireland, usually written in three pairs (for example, 12-34-56). A sort code is used together with an eight-digit account number to route domestic payments to the correct account.

BSB (Australia)

A BSB, or Bank-State-Branch number, is a six-digit code that identifies a particular bank and branch in Australia. A BSB is used alongside the account number to direct domestic Australian payments to the correct financial institution and branch.

IFSC (India)

An IFSC, or Indian Financial System Code, is an eleven-character alphanumeric code that identifies a specific bank branch participating in India's electronic payment systems such as NEFT, RTGS and IMPS. An IFSC is required, together with the account number, to route domestic transfers within India to the correct branch.

Routing number / ABA (US)

A routing number, also called an ABA routing transit number, is a nine-digit code that identifies a financial institution in the United States for the purpose of clearing payments. A routing number is used with the account number to direct domestic US transfers, including ACH payments and wire transfers, and is administered through a system originated by the American Bankers Association.

IBAN

An IBAN, or International Bank Account Number, is a standardised code of up to 34 characters that identifies an individual bank account for international and many domestic payments, particularly across Europe. An IBAN includes a country code, check digits and the domestic account details, allowing payment systems to validate the account and route funds across borders.

SWIFT/BIC

A SWIFT code, also known as a BIC (Business Identifier Code), is an 8- or 11-character code that identifies a specific bank internationally. A SWIFT/BIC is used to direct cross-border payments to the correct institution and is often required alongside an IBAN or account number when sending money abroad.

NSF / returned item

NSF stands for non-sufficient funds, a status indicating that an account did not hold enough money to cover a payment or cheque when it was presented. A returned item is a transaction the bank could not complete and has reversed — such as a bounced cheque, a failed direct debit or an unpaid standing order — and it often appears on a statement with an associated fee.

OCR (optical character recognition)

OCR, or optical character recognition, is technology that converts images of text — such as a scanned or photographed bank statement — into machine-readable, editable text and numbers. OCR is what makes it possible to extract transactions, dates and balances from a PDF or scanned statement so the data can be checked, reconciled or imported into accounting software.

Turn statement terms into clean data

Knowing the terms is the first step; the next is getting the figures out accurately. Convert a PDF or scanned bank statement into a clean spreadsheet, with the running balance preserved for checking, at /convert.