A bank reconciliation is when you compare your accounting records to your bank and credit card statements. I recommend doing your bank reconciliations monthly, and here’s why:
- Verify Cash Flow
– Knowing exactly how much cash you have in your bank account at all times is pertinent for anyone, and especially for small business owners, who typically have a lower/smaller cash flow to work with.
- Catch Errors
– Have you ever lost a receipt before? Typed 500 instead of 5.00? Or maybe transposed a number, $4.29 is now $4.92? These errors are normal, and your monthly bank reconciliation will help you find these small errors before they snowball into various small errors over numerous months.
- Save Money
– Did your bank fees increase? Did that monthly subscription that you thought you cancelled still come out of your bank account? Catching things like this in the first month makes it much easier to take care of.
– Knowing exactly how much money is in your bank accounts at all times can avoid additional fees for things like; bounced cheques.
- Prevent Fraud
– Unfortunately, fraud happens. Did someone make an unauthorized transfer from your account? Was a cheque altered? Is your account missing any deposits? The sooner you catch these fraudulent charges, the sooner it can be reported & stopped.
As you can see, having a sound bank reconciliation process in order is beneficial for many reasons. Quickbooks Online makes Bank Reconciliations very straight forward, talk to your bookkeeping professional today if you have any questions about implementing this process into your business.
