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The bank statements keep track of the data in and out the movement of money inside the accounts of the small business bookkeeping. The general ledger consists of records of the latest transactions.

Businesses of any level have to perform random reviews that are called as bank reconciliations to ensure the balance between the documents.

What exactly is Bank Reconciliation?

Bank reconciliation is a method of matching the information that is related to the cash accounts from the accounting reports to the information of the bank statements.

With the assistance of reconciliation, the Melbourne Bookkeeper in the businesses may handle their cash accounts and maintain the required balance in simpler words.

Financial statements like the general ledger show the amount of money that a business is required to have. The bank statements show the amount of money a business has because it’s a real image of the finished transactions at a particular time that altered the accounts of the company.

To maintain the correct balance of money, we are required to know two terms that are bank statement and ledger.

Bank Reconciliation Statement

It is the process of maintaining and verifying cash activities. In comparison, the bank reconciliation statement is a particular referral document created by the business for preserving the cash movements of the company.

Such bank reconciliation statements are quite useful for the partners and finances of the businesses to calculate the funding procedure. Such statements are helpful at the time of general body audits. It helps if the bank reconciliation statement gets protected safely and the files generated by the business are held onto the mandated records.

The accountant and bookkeeper in Melbourne prepare the bank reconciliation statements manually or by making use of accounting software.

Why bank reconciliation is so crucial?

The companies should generate bank reconciliation statements daily to analyze certain issues before they grow to create bigger issues. Due to the absence of daily bank reconciliations, the companies face certain complications like check bounce and failed electronic payments in the short-term.

Such short-term issues lead to problems related to financial overstretching. But all such problems result in the affected outcomes in the form of lower cash flow that may reduce the sustainability and performance of the business.

Periodic bank reconciliations assist to maintain the correct cash balance and records which are quite necessary for businesses. Along with this, regularity in bank reconciliations lowers fraud and cash manipulations to regulate the damage to the company.

The business accounts do not give similar security such as that of personal accounts. Due to this, banks don’t have to cover any frauds or mistakes in the account. Because of this, maintaining bank reconciliations is a crucial part of the safeguarding techniques of the company that regulates the loss of money, and Melbourne bookkeepers can do this for you in an appreciable way.

 Advantages of Bank Reconciliation

  • Assure efficiency of cash and entries

Being certain about the amount of cash reported on the balance sheet of the company is correct. The additions and subtractions on the bank statement get reconciled with certain items that are entered in the general ledger cash account of the company. When you are in rush in your small business bookkeeping, it is easier to forget to enter an expense or a payment; therefore cross-checking against the account statement could be a good safety net for your books.

  • Detection of errors

The errors in the general ledger of the company imply that other general ledger account will have a corresponding error. Such mistakes include the errors like addition and subtraction, double payments, or missed payments. The bank reconciliation s could prevent such companies from issuing an incorrect balance sheet and an incorrect income statement.

  • Enhance internal control over the cash of the company

If the bank reconciliation is done by someone rather than the employees handling or recording payments and receipts the internal control over the company’s cash could be improved. You could also decrease the dishonest acts of the employees.

  • Tracking receivables 

The payments due for a month could not appear on your bank statement till the next month if you get the payments near the end of the month. Such bank reconciliation statements assist you to track the individual invoice until the payment is received against it. So, at any point, you could easily track the pending bills rather than just knowing the outstanding of a customer.

  • Cash manipulators and cash fraud

It is advisable to have an independent party perform your reconciliations to stay away from fraudulent activities in the future. The bank reconciliation statement also assists you to catch employees from stealing your money.

Bank Reconciliation with Reliable Bookkeeping Services

For the proper maintenance of cash and records of a business, a bank reconciliation statement is crucial. The businesses may enhance their productivity and their supply to the customers by enhancing payment transactions with a bank reconciliation statement.

If the bank statements are done successfully, the financial statement will automatically be much more efficient and accurate.

Do you need any assistance in the bank reconciliation process?

Reliable Bookkeeping Services is the best option to choose. We provide bookkeeping services for small businesses and assure that your bank statements are up to date by a professional bookkeeper in Melbourne.

Get in touch with us!

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