The Basics on Bank Reconciliation for Start-Up Businesses
Running a business involves crunching numbers on a daily - from sending invoices, writing checks, depositing, withdrawing, to making payments. These everyday transactions play a critical role in your books since it can impact the accuracy of your monthly bank statements, which can make or mar your cash flow in more ways than one.
With thousands of transactions monthly, it’s critical to record the coming and going of your money to compare balances and vet it for any errors, duplications, and more. If you find the bank statements do not match, companies will need to make a bank reconciliation statement to adjust these discrepancies.
What is Bank Reconciliation?
Bank reconciliation is all about comparing your monthly bank statements with your internal accounts records to verify their accuracy. Any timing differences, outstanding checks, bank errors, or mistakes on your part must be addressed to resolve the issue before it starts to chip away at your capital in the long run.
What can Bank Reconciliation Offer?
Bank reconciliation is also better done on a monthly basis since minimizes the workload of errors throughout the year. It also offers the following benefits to your company:
Bank reconciliation ensures your accounting records remain up-to-date, accurate, and consistent;
Bank reconciliation spots errors and prevents them from compromising your financial statements;
Bank reconciliation identifies loss of revenue, cash flow problems, and detects fraud;
Bank reconciliation keeps your company ready for any on-the-spot audit checks;
There are many cases that a company fails to list down transactions in their records since, such as when there is a deposit still in transit, deductions from bank service fees, an outstanding check, or funds given to the bank from a client without your knowledge.
In essence, reconciling your professional bank account prevent overdrafts, identifies suspicious transactions, accounting errors, and inefficiencies in your records system, allowing you to minimize financial loss by mitigating late fees, penalties, and more.
When is the Best Time to Make a Bank Reconciliation?
Reconciling your accounts depends on every company, but it’s always better to do it monthly, especially for high-volume companies that conduct daily transactions. Catching any bank errors after months can be time-consuming and stressful, so it pays to be diligent and timely when reconciling.
The Bottom Line: The Importance of Bank Reconciliation in Businesses
It can make a world of difference in your cash flow since it promotes accuracy in all your accounting records, allowing the company to identify payment irregularities and other mistakes that can compromise your financial health. Making a bank reconciliation statement can also open up tax-saving opportunities and make tax season feel like a breeze.
Why Choose Us?
If you’re looking for reliable accounting and bookkeeping services in Mermaid Beach to manage your tax returns and apply money-saving tactics, we’re the best accounting firm to call! Contact us at (07) 55041999 and see how we can help you!