Glossary
Standing order
An instruction to the bank to pay a fixed amount to someone at regular intervals.
What it means
A customer instruction directing the bank to make fixed, regular payments automatically until cancelled.
Example
A RM250 monthly rent standing order appears on the statement but may be missing from the cash book.
Why it matters
It is often found on the bank statement first, so the cash book must be updated for it during reconciliation.
In practice
A standing order is recorded on the credit (payments) side of the cash book once the business learns it has gone through. It adds to the bank payments that reduce the bank balance in the statement of financial position. The bank statement often shows it first, so it can appear in a bank reconciliation before the cash book is updated.
A typical example is a fixed rent payment of RM800 leaving the account on the first of every month. The amount never changes, so the business instructs the bank once and the same sum goes out automatically.
It is often confused with a direct debit. The difference is who controls the amount. With a standing order, the payer fixes an unchanging sum and the timing. With a direct debit, the supplier collects amounts that may vary. Both should be entered in the cash book as soon as they are noticed.
If cash book updates in reconciliations catch you out, one of our teachers can practise the full list of adjustments with you. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 3.3 Bank reconciliation (page 13).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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