# How are bank-charged fees — service charges, check-printing charges and collection fees — treated in a bank reconciliation?

Applies to: United States · Updated 2026-09-20

A bank-charged fee is already inside the bank's balance, so it never adjusts the balance per bank. It adjusts the balance per books, downward. Unless a bank feed or an earlier notice already put it in your books, post an entry that credits cash and debits an expense, such as bank fees expense. Once it is posted, the adjusted book balance agrees with the adjusted bank balance.

## Why does the statement show these charges before your books do?

All three charges start at the bank. The bank applies them to the account itself, and your books learn of them only when the statement or a notice arrives.

- **Monthly service charge.** This is the fee many banks charge each month for managing the account.
- **Check-printing charge.** When you order checks through the bank, it can bill them straight to the account and show the charge as a debit on the statement.
- **Collection fee.** When the bank collects an item for you, such as a note receivable, it can take its fee for doing so directly from the account.

That timing gap is normal. In any account, the business knows about some transactions before the bank does, and the bank knows about some before the business. Bank charges are in the second group. On the statement they usually appear as debits. A bank debit memo means the bank has decreased the balance in your checking account. How to recognise and record a debit memo in general is a separate question. The rest of this page covers what these three charges do to a reconciliation.

## Which balance does a bank-charged fee adjust, and in which direction?

It reduces the balance per books. It never touches the balance per bank.

The reason is who recorded it first. The bank took the money when it applied the charge, so the ending balance on the statement already reflects it. Your cash account does not. The working rule for any reconciling item is to put it on the side that is missing it. A charge that is on the statement but not in the books goes on the book side. On the book side of the reconciliation, take the company's ending cash balance and deduct any bank service fees. Check-printing and collection fees go the same way, because each is money the bank has already taken.

The classic mistake is to put the charge on the bank side. Subtract it from the bank balance instead of the book balance and the adjusted balances miss by twice the charge; subtract it from both and they still miss by the charge itself. Either way the bank column has counted a charge it already contained.

Book-side items are also the ones that need journal entries. Anything the bank knows about and the company does not has to be entered in the company's own records. The full reconciliation procedure is covered in its own question.

## Is the charge already in your books?

Check this before you post anything. The rule is to record as expenses the bank charges on the statement that are not already in the company's records. A charge can already be in your books in two ways:

- a bank feed imported the statement line, and it was accepted into the cash account; or
- someone entered it from an earlier notice, an online alert or the prior month's work.

The check takes a minute:

1. Search the cash account for the exact amount, around the date on the statement line.
2. Confirm it is the same charge. The date, amount and description should all line up with the statement, and no other entry should explain it.
3. Confirm the coding. The account and memo should follow the conventions below.

If you find the charge, match it to the statement line and post nothing more. If the coding is wrong, reclassify the existing entry. Do not add a second one. If you do not find it, post the entry described in the next section.

**If you use a bank feed.** With a feed, assume the charge is probably already in your books, so verifying is the default step, not recording. A second entry does two kinds of damage. It overstates expense by the amount of the charge. It also leaves the book balance below the bank balance by exactly that amount, which looks like a reconciliation that will not balance. If an imported fee is waiting unaccepted in the feed, accept and code it there. Do not also post a manual entry. Other reasons a reconciliation will not balance are covered in their own question.

## What entry records the charge, and how is each type coded?

Each charge the books do not yet carry is recorded as a credit to cash and a debit to an expense account. The three types can be coded like this:

- **Monthly service charge:** debit Bank Fees Expense.
- **Check-printing charge:** choose one expense account for the cost of checks and use it every time.
- **Collection fee:** debit Bank Fees Expense.

Whichever account names your chart of accounts uses, keep them the same from period to period. Then the yearly cost of the account can be read from one place.

Record each charge gross, as its own line. Do not net a fee against a deposit or a collection so that only the net amount reaches the books. Netting hides both the gross receipt and the charge. It also removes the line you would need to query the fee with the bank, and it understates what the account costs to run.

## Why is a collection fee coded differently from a service charge?

A monthly service charge belongs to the account as a whole. Nothing ties it to a particular transaction, so a general bank-fees line with the statement date in the memo is enough.

A collection fee arises from one identifiable item: a particular note, draft or check the bank collected for you. Give it its own line, even if it goes to the same bank-fees account. Put the item in the memo, for example the note or customer, its reference and the collection date. Then anyone reviewing the collection can see what it cost, and a disputed fee can be traced to the item behind it. How to record the collected proceeds is a separate question about bank-originated credits. The same goes for a returned or non-sufficient-funds item: the bank's fee for handling it is a charge like any other here, but reversing the returned check is a separate question.

## What does this look like in a worked example?

Suppose the June 30 statement shows an ending balance of 11,950.00. Your cash account shows 11,155.00. One check for 900.00 has not cleared. The statement also shows three charges your books do not have:

- monthly service charge, June 30: 25.00
- check-printing charge for a new check order, June 12: 65.00
- fee for collecting a customer's note receivable, June 20: 15.00

The collection proceeds were recorded when the bank's notice arrived. Only the fee is new.

Before the charges are recorded, the reconciliation does not agree:

| Line | Per bank | Per books |
|---|---|---|
| Ending balance | 11,950.00 | 11,155.00 |
| Less outstanding check | (900.00) | |
| Adjusted balance | 11,050.00 | 11,155.00 |

The 105.00 difference is exactly the three charges. You confirm none of them is already in the cash account. Then you post three entries, one for each statement line and dated to match it, so each charge has its own line in the cash account:

| Account | Debit | Credit |
|---|---|---|
| Bank Fees Expense (monthly service charge, June 30) | 25.00 | |
| Cash (June 30) | | 25.00 |
| Check printing expense (check order, June 12) | 65.00 | |
| Cash (June 12) | | 65.00 |
| Bank Fees Expense (collection fee, customer note, June 20) | 15.00 | |
| Cash (June 20) | | 15.00 |
| Total | 105.00 | 105.00 |

In the completed reconciliation, the charges sit under the book balance and the bank column is unchanged:

| Line | Per bank | Per books |
|---|---|---|
| Ending balance | 11,950.00 | 11,155.00 |
| Less outstanding check | (900.00) | |
| Less service charge | | (25.00) |
| Less check-printing charge | | (65.00) |
| Less collection fee | | (15.00) |
| Adjusted balance | 11,050.00 | 11,050.00 |

The adjusted balances agree. The cash account now shows 11,050.00, the same as the adjusted bank balance.

## Which period does a charge belong to when the statement arrives after the cut-off?

Use the date on the statement line, not the date the statement reached you. If the bank applied the charge on June 30, the June 30 statement balance already reflects it. The June reconciliation can only agree if the June book balance reflects it too. Before posting, establish two things:

1. **The date the bank applied the charge.** This is the date on the statement line or the bank's notice.
2. **Whether that period is still open in your books.**

If the period is open, post the entry with the statement-line date. It then sits inside the period it belongs to, and the period-end reconciliation agrees.

If the period is already closed or locked, the period's state decides where the entry can go, not the charge itself. Posting into a closed period changes figures that may already have been reported or filed. Reopening it or posting the charge in the current period is a closed-period correction decision, so make it on those terms first. If you post in the current period, the closed period's reconciliation still shows the charge as a known book-side item. Note on it where and when the charge was recorded.

## What support should you keep with the reconciliation?

Keep enough that someone else can repeat the adjustment without asking you:

- **The statement line.** Keep the statement page, or its reference, showing the date, description and amount of each charge.
- **Any notice from the bank.** This means the debit advice or online notice for a one-off charge, such as the collection fee or the check order.
- **The fee schedule.** Keep the version of the account's fee schedule that sets the charge. Banks publish these documents. Wells Fargo, for example, publishes a Business Account Fee and Information Schedule with details of its business account services and fees. Look for your own bank's business account disclosures, or ask the branch for the current fee schedule.
- **The entry.** Keep the journal entry or transaction reference that recorded each charge.

If a charge does not match the fee schedule, or you do not recognise it, still record it. The money has left the account, and leaving it out keeps the reconciliation from agreeing. Then take the statement line and the schedule to the bank. Raise it promptly, and check the account's terms. Wells Fargo, for example, publishes a Deposit Account Agreement that sets the terms and conditions for all its business deposit accounts. If the bank reverses the charge, the refund arrives as a bank credit, which is a separate question.

## How do you stop a recurring charge from showing up every month?

A charge that comes every period should not have to be discovered every period. Turn it into an entry you expect to record:

1. **Pin down the pattern.** Use the fee schedule and the last few statements to find the amount and the day it posts, for example 25.00 on the last business day of each month.
2. **Record it before you reconcile.** Enter the charge on its usual date as part of routine month-end work, using a standing or recurring entry if your software offers one. At reconciliation it then matches like any other recorded transaction, not as an unrecorded item.
3. **Use one route only.** If a bank feed already imports the charge, let the feed carry it and code it the same way every time. Do not also keep a manual recurring entry, or you will record the charge twice.
4. **Compare each month.** If the actual charge differs from the expected entry, correct the entry to the statement amount. If the amount changes, check the current fee schedule and any notice of a change in terms before adjusting the expected entry.

Charges that depend on activity, such as a collection fee, cannot be pre-recorded. Keep them on the check-then-post routine above.

Once the charges are coded consistently, the bank-fees account gives you a clear record of what the account costs each month. That is the figure to take to the bank when you ask whether another account type, or a waiver condition, would cost less.

## Sources

1. AccountingCoach (Harold Averkamp) — *Bank Reconciliation (Explanation)*, undated. https://www.accountingcoach.com/bank-reconciliation/explanation
2. AccountingTools, Inc. (Steven Bragg) — *Bank reconciliation definition*, Published December 17, 2025. https://www.accountingtools.com/articles/bank-reconciliation
3. OpenStax, Rice University — *Principles of Accounting, Volume 1: Financial Accounting — 8.6 Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries*, Published April 11, 2019. https://openstax.org/books/principles-financial-accounting/pages/8-6-define-the-purpose-of-a-bank-reconciliation-and-prepare-a-bank-reconciliation-and-its-associated-journal-entries
4. Wells Fargo Bank, N.A. — *Business Account Disclosures*, undated. https://www.wellsfargo.com/biz/fee-information/

## Related questions

- [How are bank-originated credits — collections, direct credits and credit transfers, and interest credited to the account — treated in a bank reconciliation?](https://uppago.com/resources/how-bank-originated-credits-are-treated-in-a-bank-reconciliation)