I've just provided the answer on the same question here.

Just the summary:

In Odoo, reconciliation means linking each bank transaction to the correct document (e.g., customer invoices, vendor bills, or other entries). Transactions can be imported by bank synchronization, file upload (CSV/OFX), or manual entry — the method doesn’t matter as long as they are in Odoo. Special cases like customer prepayments or loans require using advance payments or accounts with Allow Reconciliation enabled. The best practice is to keep transactions up to date and reconcile regularly to avoid errors.

Good luck!

At ERPixel, we specialize in complex financial accounting in Odoo, including consolidating multiple legal entities into one company.