Whether you are managing a household budget by using a personal checking account or working with the more complex accounting of a business, account reconciliation is very important. Generally speaking, account reconciliation ensures that the amount of cash you show in the checkbook for example match the account balance shown on your bank statement as of the same date. Other accounts also will use a reconciliation.
One of the most effective tools which are used for account reconciliation includes documentation for each transaction that is recorded. For example, when reconciling a checkbook, one would refer to ATM withdrawal slips, deposit slips and canceled checks to confirm each transaction. It’s important to keep all of these things for the period of time that is being reconciled. This helps to quickly verify the transactions as well as make the transactions with the bank statement to speed up the process as well as to verify any discrepancies. Documentation is also important for disputing any discrepancies that may be found.
When verifying your business account, there may be several people who have access to the account. Because of this, it’s important that each person turn in the documents supporting their use of the monies as well as for recording in the corporate checkbook. Doing so helps maintain a good balance in the checkbook as well as saves time when reconciliation is being done. One missing ATM withdrawal slip or missing deposit slip could cause a problem during a reconciliation.
It’s important that a reconciliation be performed around the same time each month. It may be something that is slated for when the bank statement comes in or a short time after that. In any event, a reconciliation should take place each month around the same time to allow for transactions to be processed through the corporate system as well as for the bank statement to arrive. Usually, it is performed around the first of the month when all accounts are being closed out for the previous month. This process usually takes about a week and allows time for all banking transactions to be recorded.
Hopefully this will also be the time frame for the bank to complete its statement of your account, however some banks do so in the middle of the month rather than the beginning or end. It’s important to remember that mistakes can happen at any time. While reconciliation is very important, it may take a bit of research to solve a problem. That is where Integrity Bookkeeping comes in. We make sure that your books are reconciled and kept accurate. This process that is important for so many reasons can be time consuming and a headache. Not with us though, we are glad to take care of your reconciliation for you and help you avoid the frustrations from ever happening.