It is not just important that business owners take the time in order to do bank reconciliations, says Edmonton bookkeeping but it is also important that business owners take the time to do it well. When these bank reconciliations are not done carefully, business owners can have greater problems later on. Accurate bank reconciliation and have had accurate information about the money that a business owner has to use in their business, which completely will negate the purpose of doing bank reconciliations. Also, if they are done improperly, they can have far more problems at year-end, which will have to be fixed by their accountant at a greater cost to time and money.
There are several things that entrepreneurs can do to ensure that they have the best information to do their bank reconciliation properly and well. One of the first things that they can do is to ensure that they are keeping a good record of all of the checks that they have written in that previous time period. If entrepreneurs are only counting on their banks to show the checks that they have written, they will not be taking into consideration any checks that have not been cashed. Since bank reconciliation is a great tool to see how much money they have in their business including all of the checks that they have written but have not come out of their bank account yet, this is an extremely important step not to miss.
Using Intuit software called QuickBooks online, business owners can use the automated features that can help them save time as well as have more accurate information. The bank feed feature allows entrepreneurs to sync up there software with their bank account. What this will do, is ensure that for every bank transaction, it is automatically entered in real-time to their software. This can eliminate the business owner having to enter all of those transactions manually, which eliminates human error from the equation. Edmonton bookkeeping says that business owners still need to do some double-checks to ensure the accuracy of the information, but even after taking the time to check all transactions against their bank statement, the automated system is still faster and more accurate.
One thing that business owners should keep in mind when looking at their bank reconciliation, is seeing the uncleared balances that are on their report. Seeing uncleared balances usually mean that it is a transaction that has been entered into their report but has not yet cleared the bank account. Some examples of uncleared transactions that an entrepreneur might see say Edmonton bookkeeping is checked that they have written but have not been cashed yet, debit or credit transactions that they have made, or are accepting into their business. Since most transactions only take a couple of days to clear, if business owners see uncleared balances on more than one statement, that should be an indication that there may be errors. By reviewing those transactions they can verify if they actually are uncleared, or if they are errors.
It is extremely important that business owners know how to do a great bank reconciliation says Edmonton bookkeeping. This report is very important for business owners to use whenever they are making any purchases or payments in their business. It is a report that shows entrepreneurs how much money they have in their business to spend. If business owners are looking only at their bank account, they may not understand exactly how much money they have to spend. If they have payments that are being disbursed or checks that have yet to be cashed, and they have not yet cleared their bank account and may look like they have more money in their bank to spend than they actually do. By doing bank reconciliations, entrepreneurs can easily see how much money they have in their business that is unavailable.
How they should start doing a bank reconciliation is to ensure that their current bank statement opens with the same amount that their last bank reconciliation report ended with. If these two amounts do not match up together, it may mean that there were additional transactions that happened after the last reconciliation, and the business owner should re-reconcile the previous report. Once they have verified that it matches, Edmonton bookkeeping says that an entrepreneur can do the reconciliation.
Once they have finished the report, they should ensure that the information is correct. How an entrepreneur can verify that the bank reconciliation is accurate says Edmonton bookkeeping, is by check the ending balance of the report to see if it matches the ending balance on their bank statement. If that is the same, the next thing that an entrepreneur can check is ensuring that the GL for the bank in their balance sheet matches the registered balance in the reconciliation report. If both of these items match together, the bank reconciliation is verified as accurate.
The next time an entrepreneur goes to do their bank reconciliation says Edmonton bookkeeping, they need to go back and verify that the statements still match. If changes are made, it could cause items to be out in the report. If that is the case, business owners will have to get into the habit of reconciling the amount again so that they can verify its accuracy. This may seem like a lot of time re-reconciling reports, but Edmonton bookkeeping says it is much better to do this on a month-to-month basis and take a little bit extra time, then to get to the end of their year, realize all of the reconciliation reports are wrong and having to pay their accountant to fix it. Also, if entrepreneurs have inaccurate bank reconciliations from month-to-month, it could cause them to think that there is more money in their business then they have. They could end up spending money that is not in their bank account which could end up causing them to bounce payments.