One of most important things that entrepreneurs need to do according to Edmonton bookkeeping. Is learn how to spend money responsibly within their business.
It is not because entrepreneurs are spending money irresponsibly on purpose. It is just that it is very easy for entrepreneurs to make critical errors. If they do not know enough about their business finances.
A great example of this says Edmonton bookkeeping. Is when entrepreneurs think that they should be able to make financial decisions. By looking at their bank statement.
However, this is not true. And it can be very easy for an entrepreneur to spend more money than they actually have. If they are looking at their bank statement.
The reason why, is because bank statements might show an entrepreneur exactly how much money is in their bank at that given moment. But with the bank statement does not show on entrepreneur.
Is what pending transactions the business owner has in process. Such as checks that they may have written, electronic fund transfers they may have scheduled.
As well as payroll that they have organized, debit and credit transactions just name a few. Therefore, by looking at their bank account. They do not have an accurate idea of how much money they have in their business.
Therefore, it is important for entrepreneurs to learn how to do a bank reconciliation from their Edmonton bookkeeping company.
Because this is a report that takes how much money they have in their bank. And subtract all of the pending transactions from it so that they end up with a report.
Showing them how much money they have to utilize in their business. By looking at their bank reconciliation. Business owners will know how much money they have that free to be used in their business.
So that they can make their financial decision. Whether that financial decision is spending that money. Either I running payroll, paying bills, or making a purchase.
Or sing that they do not have enough money to make that purchase or financial decision. And coming up with a plan on how they are going to change that.
They can use the information to engage in some revenue-generating activities. Or if they need to engage in some collection calls. To bring the money that they are owed into their business faster.
Therefore, learning how to do a bank reconciliation. Not only can help business owners avoid spending money they do not have. But help them understand how much money they do have to spend.
And be proactive in what they have to do to bring more money into their business. So that they can make the decisions they want to.
The sooner an entrepreneur learns how to do this, the more likely they are going to be at being successful in their business says Edmonton bookkeeping.
Especially since 50% of all entrepreneurs fail. And the second most common reason why, is because they run out of money. So by learning how to do a bank reconciliation. Can increase and entrepreneurs likelihood of succeeding in business.
We can teach you better Edmonton Bookkeeping Methods.
Not only is it very important for an entrepreneur to learn how to do a bank reconciliation says Edmonton bookkeeping. But they need to learn how to do it properly, and fix any errors that might exist on them.
The reason why, is because if there are errors in any of the accounting that the entrepreneur has entered into the software. This means that the bank reconciliation.
Will not have as accurate a representation. Of how much money that the business owner has to utilize. However, many business owners do not take the time to fix these mistakes.
And can end up making mistakes in their business, because even though they are doing a bank reconciliation. There are errors that are causing them to end up with the wrong amount.
When an entrepreneur completes their bank reconciliation. Edmonton bookkeeping says they will be left with a list of transactions that have not cleared their bank account yet.
The first question that business owners need to ask themselves. Is why has not it cleared yet? Is it because it is a valid transaction that simply waiting, or is it a mistake?
They can determine mistakes very easily. By looking at how long these various transactions are taking to clear. The longer they are, the more likely they are a mistake.
However, Edmonton bookkeeping also cautions business owners. Because some transactions will take significantly longer than others.
A great example of this, is checks, checks can take several days if not weeks or months to clear. First of all, because typically a business owner will send a check through the mail.
Therefore, however long it takes the check to arrive in the mail. It could take several days. And then it needs to get to the right person in that business. Will then open up the check, and entered into their accounting software.
If this process takes the person who receives the check several days or a week or more. Such as a company that only does bookkeeping once or twice a month. This can cause the check a long time to clear.
Once that person enters the check into their accounting software. They then need to take it to the bank, and once it is finally deposited into the bank. It can take another several days to clear.
However, and electronic transaction should never be pending at all. Because an entrepreneur will know that they have electronic transaction. When it actually appears in their bank account.
Because of the wide variety of lengths of time it takes to clear pending transactions based on what they are. Business owners need to be familiar with what transactions there are.
And how long each transaction will take to clear, in order to look at their uncleared transactions. And look at the ones that have been uncleared for longer than they should.
When they figure out those transactions. And they will be able to look at the ones that are most likely errors. And go into their accounting software to fix. To end up with the most accurate bank reconciliation possible.