For those who don’t know much about bank reconciliation statements, we are here to highlight the important points that will help you understand what does a reconcile bank account mean and why is it important. Reconciling bank statements is a part of the bookkeeping process. Either bookkeeper or an accountant reconciles your bank statements.
What is Bank Reconciliation?
Reconciling your bank statements include comparing your business transactions with the bank’s transactions. The primary goal of reconciling bank statements is to ensure that the recorded balance of your business matches the recorded balance of the bank.
Reconciling bank statements will help you catch errors, verify cash flow, and prevent fraud. While financial statements like a general ledger shows how much money you should have, on the other hand, a bank statement shows how much money you have because it will show a clear picture of your transactions over a specific time period that affected your business account. Melbourne bookkeeper will find the difference between transactions in your accounting system and transactions in your bank or credit card statements.
Who is Responsible for Reconciling Bank Statements?
If you manage bookkeeping tasks on your own, then you have to be prepared to reconcile your bank statements as well on monthly basis. If you hire small business bookkeeping services, then your bookkeeper will be responsible for reconciling bank statements. Reconciliation can keep you away from many problems in many ways. Bookkeepers can identify the issues before getting too late as they are monitoring cash flow constantly.
Apart from this, accountants small business can also help businesses in checking to ensure each number is checked and the books match reality. Bookkeepers or accountants are responsible for preparing reconciliation bank statements either by hand or with the help of accounting software.
Importance of Reconciling Bank Statements
Here are the reasons why you need to reconcile your bank statements every month:
- Find Out Errors
Missing entries in the register and misread receipts are common accounting mistakes and are easily identified. However, when these mistakes remain uncovered month after month, then it will become difficult to find out errors and solve them. It can lead to overdraft and cash shortfalls. When you get help from accounting and small business bookkeeping services providers, then they can help you solve these problems. - Track Cash Flow
Managing cash flow is as important as you manage your business. When your bookkeeper reconciles your bank statements, then you can see when money enters your bank account, and you can plan how you get and spend money accordingly. Melbourne bookkeeper can help you track your business cash flow. You can also assess the financial status of your business by considering cash flow. - Prevent Fraud
Reconciling bank statements can also prevent fraud and prevent your employees from stealing your money. If one of your credit cards was misused, then there are higher chances that others are also at risk. Hence, reconciling bank statements can reduce damage from fraud. If an employee changes or steals the cheque, then bookkeepers of Melbourne can perform a reconciliation process to minimise the risk of fraud. A solid reconciliation process is important for your business, so make sure to ask your bookkeeper to implement the reconciliation process as soon as possible. - Avoid Uninvited Surprises
When bookkeepers of Melbourne reconcile the bank statements each month, then you could avoid surprises. If payment was lost in email, then you will have a chance to reissue the cheque. If your credit card statements, bank account, and bookkeeping don’t match, then you have to spend money. To avoid these surprises, it is important to reconcile bank statements.
Bank reconciliation should be done daily to know if there are any discrepancies before they become complex issues. Without reconciling bank statements, your business can lead to bounced cheques or business finance issues. All these results can impact cash flow that can affect future growth and the financial sustainability of the business.
Timely reconciliation can help detect fraud and cash issues to reduce damage to the business. Hence, it is important to reconcile bank statements to protect your company from losing money. With reconciliation, bounced cheques to partners and suppliers can be reduced that can help improve brand trust. If you want accounting in Melbourne, then make sure to choose a professional accountant for your business.
Conclusion
The accounting process involves tracking income and expenses and bookkeeping services help you record each financial transaction, send invoices and expenses, preparing financial statements, such as income statements and balance sheets. As accounting and bookkeeping services involve these tasks, so make sure to hire a professional bookkeeper and accountant for your business. If you want to do it yourself, then your attention should be completely on business books and accounts. For reliable bookkeepers, you can contact Reliable Bookkeeping Services.