Edmonton bookkeeping says that business owners need to ensure that whenever they are doing bank reconciliation, that they are doing it with accuracy in mind. The reason that is important, is because it is very easy to do quick bank reconciliation, but if they are not going to verify its accuracy, it is not worth doing in the first place. The reason for that is because bank reconciliation is a tool that business owners can use to verify how much money they have in their business to spend. If they do it improperly, carelessly, or without verifying the information, it is not an accurate tool that can help them. Therefore, business owners should endeavor to do their bank reconciliation properly so that they can use it in their business. The author of the best seller the E Myth, Michael Gerber had this to say about doing things properly: “the work we do is a reflection of who we are. If we are sloppy at it, it is because we are sloppy inside. If we are late added, it is because we are late inside. If we are bored by it, it is because we are board inside, with ourselves, not with the work. The most menial work can be a piece of art when done by an artist. So the job here is not outside of ourselves, but inside of ourselves. How we do our work becomes a mirror of how we are inside.”
Doing a bank reconciliation properly only requires a few simple things says Edmonton bookkeeping. Thank statements and a copy of all of the checks that have been written in the last pay period. In addition to those things, business owners should bring the previous months of bank reconciliation. The starting point is to check the bank statement and that the previous bank reconciliation ends and the current bank statement begins at the same place. This is an extremely important place to start because there is no way that a business owner can end up with the proper information at the end of the bank reconciliation if they are not starting from the right place.
When it comes to software, Edmonton bookkeeping says that any accounting or bookkeeping software will be just fine to use for bank reconciliations. In fact, business owners do not even need to have fancy software in order to do the bank reconciliations properly. They can do it with just an Excel spreadsheet software, However, if business owners are looking for a specific program, the recommendation is to use QuickBooks online. Not only because it is user-friendly, but because it has technology built into it that can make business owners’ job of doing a bank reconciliation faster, easier, and more accurate.
Learning how to do a proper bank reconciliation can help entrepreneurs have the tools they need in their business in order to avoid running out of money in their business says Edmonton bookkeeping.
One of the most important reasons why business owners should have proper bank reconciliations done says Edmonton bookkeeping, is because while 50% of Canadian entrepreneurs fail before being in business for five full years, 29% of those failed entrepreneurs say the reason why they failed is that they ran out of money in their business. Business owners can avoid running out of money in their business if they learn how to do proper bank reconciliations, and then use them properly in their business to be guided towards the best financial decisions possible. If they do a bank reconciliation before they make any payments, disperse any money, do payroll, pick dividends at of their corporation, or purchase assets, business owners will be able to know how much money they have in their business in order to make that financial decision. If they do not have the money to do that, business owners can increase revenue, engage in some Accounts Receivable activities, or cut expenses. Whichever they decide to do, business owners will be able to make those decisions better and more accurately by understanding exactly how much money they have in their business to do so.
Edmonton bookkeeping says that many entrepreneurs think that they will be able to get the accurate financial information they need to make purchasing decisions simply by looking at the bank statements that they have. While that can give them an idea of how much money they have in their bank, it is not an accurate reflection of how much money their business has to use. For example, if entrepreneurs have just finished writing ten thousand dollars worth of checks to vendors, three days later maybe none of the checks have cleared their bank account yet, and a business owner wants to know if they can take dividends out of the corporation. If they are only looking at their bank statements, they may see that they have access to several thousand dollars. If they take that dividend out of their corporation, they may trigger bounced payments when those vendor checks get cashed.
Instead of counting on the bank statements in order to see how much money they have in their business to spend, bank reconciliation is the tool that helps business owners understand how much money they actually have in their business. The bank reconciliation takes a list of all of the transactions, all of the payments that are scheduled to come into the business as well as all of the checks or disbursements that are scheduled to come out of the bank. By taking all of that information into consideration, a business owner is left with all of the money that a business has to use. Therefore, if a business owner wants to see how much money they have to be able to take dividends of their corporation, instead of looking at their bank statement, they can look at their bank reconciliation, and see that they have the money to do that or not says Edmonton bookkeeping.