One of the key activities for any business is reconciliation. Monthly financial reconciliation is the process of making sure that the business’s records of transactions on a bank account match the bank statement. Every time someone in the company writes a check, uses a debit card, makes a withdrawal or deposit to an account, the transaction is recorded. At the end of the month, the bank sends a statement and it is vital to reconcile the two sets of records
It is certainly easy enough to forget to record a debit transaction that happens, but good account reconciliation also addresses larger issues such as identity theft and bank errors. In short, the company knows the exact status of the account for that particular time frame.
Bank errors can drastically affect a bank account and need to be addressed immediately. Direct deposits may not occur due to something as simple as a program change. This could affect a lot of employees in a negative way, and shows the company in a poor financial light to it’s staff.
Bank drafts may not always occur on the day you expect, which can also drastically affect your account balance. Consider weekends and holidays, as well as short months like February when scheduling automatic drafts. They may occur earlier, or later, than you planned for. A debit card transaction can be entered wrong, and since the funds leave your account immediately, correcting these issues can take up to a week with the bank.
The wonderfully automated banking system of today works accurately (almost) all the time – and it is your accountant’s job to catch those few times that it doesn’t work the way it should. Rely on a professional staff member to accurately reconcile all your bank accounts each month, or even each week if necessary. The peace of mind knowing your money is watched closely is priceless.