Bank account reconciliation involves matching the records in your business’s bank account with the records in your accounting software. Depending on how often you make transactions or deposits to your account, the process can be done quarterly, monthly, or annually. It is essential to prepare a bank reconciliation statement to ensure that none of your transactions have been skipped or duplicated.
Why is it important to reconcile your bank account?
It is essential to reconcile your bank accounts to avoid mistakes and identify discrepancies. A bank reconciliation is the process in which the balance recorded in your accounting software is matched with the bank statements. This process reveals mistakes and ensures whether your documents are accurate or not. By reconciling your bank account, you can get numerous benefits, such as protection against loss of funds, error detection, identification of the source of differences in bank statements and verification of the accuracy of your records.
How to save time when reconciling your bank accounts?
As a business owner, it might be difficult for you to get time to reconcile your bank accounts. There are several options available to save time during bank account reconciliation. Here are different ways that can help save time while reconciling your accounts:
Seek help from a professional bookkeeper
When you have accurate information, it will become easy to show what is missing from a bank account reconciliation. In case any transactions are skipped, additional reconciliation must be conducted. Hence, having all the required documents allows you to reconcile bank accounts quickly. Small business bookkeepers will ensure to provide you with accurate records and can help with bank account reconciliation.
Plan ahead
One of the daunting tasks in reconciling a bank account is balancing. If you want to save time, it’s essential to plan ahead. When reconciling your bank accounts, it is essential to have the latest statements to avoid spending time finding statements. Keep monitoring when your statement will be displayed in your email inbox.
Use electronic statements
One of the best ways to save time during reconciliation is by reducing paper statements. By opting for electronic statements, you can save a significant amount of time.
Identify the reasons for discrepancies
A discrepancy occurs when two statements differ. To perform bank reconciliation, it is best to identify common errors. Understanding these mistakes allows you to avoid them in the future. Accurate bank account reconciliation saves you time.
Double-check bank records
If you are unable to understand some discrepancies, you can consult your bank and double-check the records.
How to reconcile your accounts?
When you perform bank account reconciliation, you must address what’s causing discrepancies. Reconciliation helps you match your business records with bank statements to identify and resolve errors (if any).
- In the first step, you need to collect records and the bank statement for the time period you need to reconcile, along with business records for the same time period. Make sure you have accurate records because these records are useful during tax season. When you reach out to the best accountant in Melbourne, you can provide these records to them so they can use them to lodge your tax return.
- Make sure to check your opening balance on the bank statement, which must match the opening balance on your accounting records.
- After verifying your opening balance, you need to review your transactions. Match your business’s account with the bank statement.
- If you find that some items are not shown on the bank statement, you must add them.
- Similarly, your business’s cash account may need some adjustments.
- Despite this, ensure matching the final closing balance on the bank statement with your account. The two must match. This closing number will become the starting balance for your next bank account reconciliation.
Conclusion
When reconciling your bank accounts, make sure you are doing it frequently. If you perform reconciliation on time, it will become easy to handle the process. You can also rely on a bookkeeper to do it on your behalf, so you can perform other tasks in your business. Apart from reconciliation, bookkeepers also offer reliable bookkeeping services to help you record everything on time and accurately.