To ensure that your company's bottom line is intact, you must maintain adequate books. One aspect of bookkeeping is bank reconciliation, which is a process that assists in ensuring accuracy by matching bank transactions and your business's financial records. If you are unfamiliar with this process or need more information, keep reading to learn the answers to some commonly asked questions about bank reconciliation.
How Is Bank Reconciliation Performed?
A professional accountant will take the bank statement balance of your company and compare it to credit card payments, cleared checks, and other company financials that are listed within the bookkeeping records. Ultimately, the goal with bank reconciliation is to identify any unusual activities, differences, and/or missing transactions.
How Often Should Bank Reconciliation Be Performed?
Bank reconciliation needs to be performed several days after the conclusion of each month. This gives any transactions that were done throughout the month time to process and clear. In addition, it helps in the identification of outstanding payments or expenses that were not logged into the bookkeeping records yet were cleared by the bank. By keeping a consistent eye on this, you can ensure that you maintain an adequate financial paper trail.
What Are Some of the Most Common Causes of Inconsistencies?
In a few instances, checks that were written to your business or from your account may not have cleared, particularly if the funds came from or were issued to an entity out of the state or if it is a weekend or holiday. In addition, there may be cases when you may have been charged extra fees for wire transfers or printing checks that you don't have in your company bookkeeping records.
What Is the Benefit of Bank Reconciliation?
Performing bank reconciliation helps to ensure that there is a constant management over the business's cash flow. In addition, it helps to reduce the overall risk of overcharging your company account. Many companies choose to outsource bank reconciliation and other similar services to reduce and/or eliminate the possibility of fraudulent activity within the workplace.
Seeing as how bank reconciliation is an important part of maintaining your company's bookkeeping records, you may want to consult with an accounting firm in your area to assist you with this task. This is especially true if you are not familiar with accounting tasks or are worried that you may make a mistake. For more information, contact a business accountant in your local area.Share