It is not just important that entrepreneurs learn how to do a bank reconciliation report says Edmonton bookkeeping, but they need to do it regularly, before any financial transaction in their business. They also need to do it well. Inconsistent or poorly done bank reconciliation reports are not going to help entrepreneurs use that information to make financial decisions in their business. Therefore, is owners need to know important it is to double-check all of their reconciliation reports, and how to check them so that they can verify the accuracy of the information. When entrepreneurs think that bank reconciliation reports are so easy that they do not feel they have to be careful, they can end up triggering greater errors with their financial decisions, which might result in them making purchases they cannot afford, or triggering larger financial errors down the line, which could create big problems in their business.
The first thing that entrepreneurs need to know before any time the do bank reconciliation in their business, is understanding that they have to start by double-checking their previous month. How they would do that says Edmonton bookkeeping is looking at the beginning balance of their current bank statement, and double-checking it against the ending balance of the previous bank reconciliation report. If these two totals do not match each other, it is important that business owners going to have to re-reconcile the previous month’s report. It should not take a significant amount of time since most of the work will have been done already, but this double-check system is that when an entrepreneur is doing the bank reconciliation, that they are starting their report properly.
Not only should entrepreneurs be starting the report properly, but they need to be doing double-check systems throughout the creation of the report. This is especially true even if entrepreneurs are using automated software like QuickBooks Online and its bank feed in order to have all bank transactions automatically updated into the software. While this system is faster as well as more accurate, then manually updating all those transactions into the software, business owners should also understand that technologies not infallible, and needs to be reviewed.
Once an entrepreneur has started the reconciliation with the right amount and has double-checked all of the transactions to verify the accuracy of the information, once they have finished the report, they also need to verify the accuracy of the report when it is finished. How they should double-check the accuracy of the report when they are done says Edmonton bookkeeping is to check the ending balance to see if it matches their statements. Once that has been verified as accurate, Edmonton bookkeeping says that they should match the GL for their bank on their balance sheet. If those two items match, they should be certain that the report has been done accurately and they can use the information to know how much money they have in their business to make financial decisions.
If entrepreneurs are not double-checking their bank reconciliation reports says Edmonton bookkeeping, they have no way of verifying the accuracy of the information, and therefore are unable to be certain if the money that is showing as available is actually available in their business. If entrepreneurs are using their reconciliation reports properly and using them to help guide financial decisions in their business, ensuring the accuracy of the information is one of the most vital things that they can do.
Entrepreneurs are working on their bank reconciliation reports, they should be double-checking all of the accuracy of each transaction. Transactions that they need to be entering into their reconciliation report, are everything that has come into their bank account or gone out of their bank account. Debit and credit transactions both outgoing and incoming, all checks that have been written, even if they have not yet cleared the bank need to be accounted for.
Edmonton bookkeeping says that the reason why this is so important is that if entrepreneurs just look up how much money they have in their bank, they may not have an accurate picture of how much money they have to use. The reason for this is because the amount of money that is listed in the bank account does not take into consideration any transactions that are waiting to clear such as checks that need to be cashed, or disbursements of money that have not come out yet. If an entrepreneur has written several checks for several thousands of dollars if those checks have cleared it may appear to the business owner that they have several thousand dollars that they can spend. If they end up spending more money, and then those checks clear they can create all sorts of payment problems.
When it comes to checks that have not cleared yet, this is another important thing for entrepreneurs to double-check in their reconciliation report says Edmonton bookkeeping. Uncleared transactions should not show on their report for longer than one month, because it should only take a couple of days to clear most transactions. Therefore, if transactions have shown up on multiple’s, entrepreneurs should first look to see if there has been an entry error, either it has been duplicated or an incorrect date has been attributed to it. If an entrepreneur has verified those things are not causing the error, they should contact their vendor to confirm that they received the check. If they have not received the check, that would explain the reason why it has not been cashed yet. If they have received it, then business owners can encourage them to cash that check when they can, so that it can clear the bank account.
By being careful when doing the reconciliation report, and double-checking everything, Edmonton bookkeeping says that entrepreneurs can ensure that their reconciliation reports are error-free, which can help them avoid making inaccurate financial decisions.