As a business owner, you must know the importance of keeping financial records accurate. You will also find it difficult to keep an eye on financial records in daily hustle and bustle. It is easy for numbers to get input incorrectly and transactions to get lost. This is where bank account reconciliation comes to play its role, which is usually done by professional bookkeepers for small businesses.
It is an important process helpful in ensuring accurate records and keeping your accounts updated. In addition to this, bank account reconciliation will help you monitor your accounts for irregular activities. So, instead of assuming that bank statements and financial data in business books are correct, you should perform a reconciliation of bank statements. In today’s blog, we’ll discuss the bank account reconciliation process in detail.
Should You Rely on Bookkeepers for Bank Reconciliation?
If you manage bookkeeping tasks on your own, then you will be responsible for the reconciliation of bank statements at regular intervals. However, if you have bookkeepers in your company who manage bookkeeping, then they will reconcile your bank statements. As a business owner, you might not have enough time to reconcile your bank statements. Thus, you need to hire a Melbourne bookkeeper to reconcile your bank statements on your behalf.
Basically, bank account reconciliation is the process of comparing the financial records of your company’s ledger against the record of your bank. With the help of this process, you can check if there are any differences between the two financial records. The following are a few reasons why you should rely on bookkeepers for reconciling bank statements:
Keep Track of Cash Flow
Bookkeepers of Melbourne are experts in reconciling bank accounts so you can have a clear picture of the cash that flows in and out of your account. As a result, you will be able to see whether you are making a profit or not. Additionally, you can reconcile your credit card receivables to ensure that everything is going well as planned.
Spotting Errors
Even after following strict rules, the possibility exists for human errors. If you fail to reconcile bank statements every month, then these errors can go undetected. As a result, these errors can cost you big. For example, according to your internal ledger, the amount you spent is different from the fees you paid according to the bank statement. Therefore, bookkeepers in Melbourne will help you spot these types of errors to fix them on time.
Managing Accounts Receivables
One of the major concerning factors in bank account reconciliation is a cheque which is not clear because of insufficient account funds. If you check your accounts receivables regularly, then it can help you spot these issues so you can either re-bill the customer or vendor or write off the discrepancy or inconsistency as a bad debt.
Be Prepared for Lodging Taxes
Taxation accountants need fully reconciled records of business expenses and income to do tax returns. Thus, it is important to reconcile your bank account, so your accountant can prepare and file tax returns. Accurate recording of financial data can help you lodge tax returns. If you file tax returns late, then you have to pay a penalty or fine to the legislative authority.
How Often Bank Account Reconciliation Should Be Done?
Basically, you must reconcile your bank accounts every time you get a statement from your bank. This is often done at the end of the month, weekly and even you can do at the end of each day. Before your bookkeepers do bank reconciliation, it is important for you to have a record of all financial transactions. Moreover, it depends on your business structure and your bookkeeper can better decide how often they should reconcile your bank accounts.
Conclusion
Irrespective of whether you have a small business or a large business, you must reconcile bank statements. If you don’t know how to do it, you should seek help from a bookkeeper. Now, you know the importance of bank account reconciliation, so to run your business effectively, make sure to do it. You can also contact Reliable Bookkeeping Services provider, where you can seek help from professional bookkeepers.