Do you reconcile your bank statements once per year? This is the beginning, but if you want to grow your business, you must have a clear picture of your cash flow, catch fraud and understand what types of fees you are paying before it goes too far to resolve. However, many businesses reconcile their bank accounts weekly or monthly basis. It completely depends on the nature of the company. If you want to focus on your business growth rather than spending time on bank account reconciliation, you must hire bookkeepers in Melbourne. Moreover, in today’s blog, we’ll talk about the purpose of preparing bank account reconciliation statements.
What is a Bank Reconciliation Statement (BRS)?
Basically, BRS is a statement that bookkeepers prepare on a specified date to compare the bank balance given in their cash book against the balance given by the bank’s passbook. Through the statement, you can differentiate the reasons between the two. A company can prepare BRS at any time during the financial period.
How Often Should You Prepare BRS?
Well, there is no fixed date to prepare BRS. However, many companies ask Melbourne bookkeepers to prepare this type of statement on a periodic basis. Generally, they prepare BRS to check all bank-related transactions, and whether they are recorded properly in the bank accounts and business books.
The primary reason behind this statement is to identify errors in recording transactions. It also means that a business has an accurate and updated bank balance and business books on a specified date. As a result, you can spot irregular payments.
The more frequently you prepare and generate BRS, the more up-to-date your financial management will be, with reduced chances of irregularities. Thus, Melbourne bookkeeping services providers ensure to help you prepare BRS every time you get a statement from the bank.
Why Should You Prepare BRS?
There are various reasons to prepare a bank reconciliation statement. Some reasons are written below:
Spot Accounting Errors
Accounting errors include double or missed payments, which are not uncommon. When you reconcile your bank accounts, you can identify such accounting errors early. Business owners want to know if there are errors before they cause the situation worse.
Managing Expected Risks
With the help of bank account reconciliation, you can easily spot fraudulent activities. In addition to this, you can reduce the risk of transactions that might cause late fees or penalties. Bookkeepers for small businesses can help you prepare BRS to avoid errors.
Keeping Track of Fees and Interest
With bank account reconciliation, you can keep track of fees, interest payments, or penalties that your bank may add to your account. After that, you can subtract or add such amounts to your business books.
Confirming Receivables and Payables
BRS helps you confirm all your receipts. As a result, you can identify any entries for receipts that you didn’t deposit. Furthermore, you would also come to know if you still have an outstanding cheque. When you have a record of each financial transaction, then it would be beneficial for a tax return accountant. A tax accountant can prepare and lodge a tax return on your behalf to help prevent you from paying penalties to the ATO.
Tracking Cash Flow
Reconciling accounts would help you know the amount of cash that flows in and out of your accounts. Additionally, you can reconcile your credit card receivables to ensure that everything is accurate and running smoothly.
Accuracy in Your Balance Sheet
As a business owner, it is important for you to know the cash amount that is reported on your balance sheet is accurate. The purpose of doing this is to ensure deductions and additions on the bank statement are matched with the company’s business books.
The blog highlights the point of why you should reconcile the bank accounts and how often you should reconcile them. As a business owner, you may not have enough time to perform bank account reconciliation. Thus, you can seek help from an expert bookkeeper. Experienced and professional bookkeepers can help keep your business books updated and accurate. Furthermore, you can get bookkeeping solutions for your business so you can focus on the company’s growth. Reach a Reliable Bookkeeping Services provider for bookkeeping solutions.