It is important for entrepreneurs to learn how to do bank reconciliations properly says Edmonton bookkeeping. If entrepreneurs are taking the time to do them, but not doing them well, all they are doing is wasting their time. Bank reconciliation reports that have not been done accurately or double-checked, are not going to be able to be used as great tools for entrepreneurs to make informed financial decisions. If they are not taking the time to do it properly or well, they may as well not do them at all because the end result will be the same. Therefore, business owners need to understand what makes the bank reconciliation report that they do better, and how to verify its accuracy.
One of the first things that entrepreneurs need to know when doing bank reconciliation and Edmonton Bookkeeping, is that they should put the time to do it into their calendar so that it can be scheduled. When it scheduled, the chances are much greater that it is going to happen, and a business owner will be able to work on it uninterrupted. If business owners think that they are just going to be able to find the time in their business to do it without having it scheduled and, they are setting themselves up for failure.
The first place that a business owner should start when doing a bank reconciliation is by double-checking. This might seem like a waste of time to some entrepreneurs, especially because if they have double-checked the bank reconciliation report at the end, they often do not think that they should do it at the beginning as well, but this is not true. I am ten bookkeeping recommends that business owners always start off by verifying they are starting correctly. How they would do that, is by looking at their bank statements against their reconciliation report. The ending balance of the report should match the beginning amount of their statements. By doing this, entrepreneurs can verify that no additional transactions happened after the last report, that triggered this to be incorrect. By verifying the accuracy of the information in the beginning, they are ensuring that whatever totally end up with at the end is a higher degree of chances that are going to be correct.
The next thing entrepreneurs need to know when they are doing their bank reconciliation report is if they are double-checking every transaction. Many entrepreneurs do not understand what they have to double-check transactions. If they are doing it manually, they often believe that it does not require a double check because they are being careful when they enter it. Edmonton bookkeeping says that entrepreneurs often also think that if they are doing an automated bank feed where the bank transactions automatically populate into their accounting software, that they do not need to double-check. This assumption would be wrong. No matter how the information is getting entered into the software whether it is manual, or automatic business owners should verify the accuracy of the information all the time.
When entrepreneurs are doing bank reconciliations in their business, they should be doing it as accurately as possible so that they can verify the reports are as error-free as possible says Edmonton bookkeeping. The reason why this is so important is that when entrepreneurs are using the information to make financial decisions in their business, the more accurate those reports are, the better tool it is to make a better business decision.
Once an entrepreneur has completed their bank reconciliation, they need to look at their uncleared transactions because uncleared transactions could be an indication of errors. Edmonton bookkeeping says that by looking at obvious potential errors can help entrepreneurs verify the accuracy of the information overall. What uncleared transactions are, are transactions that have been entered into the software, but have not yet cleared the bank account. Examples of transactions that are uncleared could be if a business owner uses their debit card, but it has not come out of their bank yet. Or if it is transactions that have come into the business through the business point-of-sale machine, but has not yet been deposited into the bank.
Edmonton bookkeeping says the most common uncleared transactions are checks that have been written but have not been cashed yet. The reason why business owners need to be very aware of these is that they could be in error, but they also are checks that have not been cashed yet. If they show up more than once in a report, entrepreneurs need to be calling the person with that check to verify that they received it. If they have received it is a great reminder to cash that check. If they have not, business owners can send the check out again and verify that the person gets it.
If uncleared transactions appear in more than one report, business owners should do some checking to ensure that it was not a duplicate entry and that the date on the transaction was correct. Both of those entry errors could cause those amounts to be uncleared balances. By being aware of this information, and working to clear it, business owners can also ensure the accuracy of that information.
Once a business owner has verified the uncleared transactions, the next thing that they can do is finish up the reconciliation report by double-checking it for accuracy. And bookkeeping says how entrepreneurs would do that is by looking at the ending balance to ensure that it matches the statement. Once that information is accurate, the next thing that an entrepreneur should do is match the GL for their bank on their balance sheet with the registered balance. If both amounts match up, then a business owner can be certain that they have done the bank reconciliation properly and they can then use it in their business to make guided financial decisions.