Bank Reconciliation: What is It and Why is It Important?

 

What is Bank Reconciliation

The idea behind a bank reconciliation is to make sure that data from both your company's records and those maintained by banks match up. This control can help catch any missing or inaccurate information before it gets reported as an error, but what if there was some way for you to do this while still maintaining internal controls?

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How Bank Reconciliations Work

Accountants and bookkeepers use reconciliation to make sure that all transactions are recorded in the general ledger. They match up data from bank statements with what was posted during different times, including deposits received but not yet deposited into an account as well as withdrawals made using funds available for such things; if there's any discrepancy then errors may exist which needs attention immediately!

Why it's Important

A bank reconciliation is an integral part of the audit process. If your business is registered to be audited by a regulatory agency, then it must ensure that its internal records are reconciled with information from its banks. This ensures that everyone is on the same page regarding finances.

Bank reconciliations also help in preventing any type of financial accident when it comes to finding missing money. This is when your company gets customer payments and makes deposits, but they get misplaced before making it to the bank. If you don't reconcile this with your books, then you may not know where such transactions ended up, so they'll be recorded as errors in your records.

Fraud Detection

At a time when many banks are struggling to survive, you must have an automated process for reconciliation. When fraud is detected in your bank records before month-end or during normal business hours (depending on what type of situation applies), discrepancies can be immediately pinpointed and corrected right away- which means there'll never again need another panic call asking, “Where did we go wrong?”

Bank Reconciliations tightens up every inch of security by preventing criminals from planning their next crime because they know all about recent transactions thanks exactly down these minute detail fullest possible times!

Prevented Errors

With modern accounting solutions, such as templates and signoffs for reconciliation preparation in place you can rest assured that all will be done on time. You won't have to worry about missed or incorrect numbers because this software ensures accuracy with both supporting documents (such as invoices) and timely reporting of changes from day one—preventing errors before they happen!

Knowing your company's financial standing is vital for success in any business. Banks are integral parts of businesses, but the reconciliation process itself can be labour-intensive and tedious if done manually. However, this doesn't need to be the case when you implement an automated accounting solution that streamlines the entire process while trimming down on wasted time.

If you need any help with your bank reconciliation or overall bookkeeping speak with one of our experts today at iKeep bookkeeping.