Entrepreneurs need to learn that it is not important just to do bank reconciliation, but Edmonton bookkeeping says that the accuracy of it is important, so business owners need to know how to do it well. Basically, the way to ensure that the bank reconciliation is done as good as possible is to double-check the report at the beginning, the end, and then several times throughout the process. Because of the importance of the report, entrepreneurs should be verifying the accuracy of it often. But entrepreneurs do not take the due diligence needed to do the report well, or they do not have time to double-check it, they may end up a report that has errors that cause them to make poor financial decisions or have huge errors to fix at their fiscal year-end.
The way an entrepreneur should start doing their bank reconciliation report says Edmonton bookkeeping, is by reviewing the accuracy of the information at the beginning. For example, they need to take a look at their current bank statement and verify that the starting balance is the exact same as the ending balance of the previous bank reconciliation report. If for some reason this is not the same, then entrepreneurs should we reconcile the previous month. If entrepreneurs start doing the bank reconciliation without verifying that they are starting work finished off last time, then there is no way that they can end up the correct information at the end. Business owners should consider this starting point an extremely important verification system to ensure the accuracy of the two.
The next thing that entrepreneurs need to verify they are doing their bank reconciliation is that all of the transactions are accurate. Whether they are manually entering all of the transactions from the bank statement themselves, or if they are using an automated process such as bank feed to ensure that every transaction is entered directly into the software in real-time, Edmonton bookkeeping says that both require the business owner to double-check all of the transactions. It should not take long to double-check once the transactions are in, but if errors are caught, then it will be well worth the business owners’ efforts. To verify the accuracy of the information can ensure that the report ends up with the right amount.
Once entrepreneurs have double-checked the accuracy of all of their transactions that have been entered, business owners can end up with their final reconciliation part. They should be aware of all of the information that is contained in the report so that they can be familiar with its contents. They should have the beginning balance, all cleared transactions, the incoming deposits, as well as the ending balance. Edmonton bookkeeping says that they will also be able to see the uncleared balances and the registered balance. The looking to see all of those things exist on their report, and by ensuring that they double-check every single transaction, business owners can ensure that they have a great report that can help them significantly making financial decisions in their business.
A common misconception about bank reconciliation reports is that they are so easy that entrepreneurs do not need to take due care and diligence in creating them says Edmonton bookkeeping. Also, if entrepreneurs do not understand how important they are, they may get away from doing those reports before any time they need to make financial decisions in their business. These are common errors that business owners can avoid when they do a bank reconciliation so that they can ensure that they are doing the report well, for it to be a very useful tool that can help guide their financial decisions.
Once an entrepreneur has ensured that they have started the reconciliation report exactly where the last one finished off and that they have double checked all of the transactions for accuracy, a business owners double-checking of their reconciliation report does not end there. What they should next do is review all of the uncleared balances in the report. Edmonton bookkeeping says what uncleared balances are, are all of the transactions that have been entered into the software, that has not yet appeared in the bank account. There is many reasons why the transactions might not have shown up in the bank account yet. For example, if it was a purchase that an entrepreneur made their debit card, it might not appear in their bank account on that same day. Especially if the entrepreneur made the purchase after banks close, or on a weekend, that amount might not be represented in their bank account yet.
Other transactions that might cause and uncleared balance the checks that have been written and sent out not yet cashed, or transactions that a business owner received on their point-of-sale machine either through debit or credit that has not been entered into their bank account yet. Most of these transactions usually take a couple of days at most to clear, therefore business owners should look at the uncleared balance and ensure that it is of reasonable number.
Another thing that entrepreneurs should be looking at with uncleared balances, is if they have appeared on more than one statement, this usually an indication that there are problems. Since most transactions clear within a couple of days, if it has been a month or more, business owners should look at that to see if there have been any errors made. Errors such as duplicating the entry, or having the wrong date on it could cause these transactions to show was uncleared they actually need to be deleted.
Edmonton bookkeeping says that if entrepreneurs have verified there are no errors, and especially if it is a check, business owners should call their vendor to check if they have received that check and if they have found out why they have not cashed yet. By staying on top of uncleared transactions, business owners can eliminate errors and help their clients get the payments that they need.