It is not just important to know that doing bank reconciliation reports is important says Edmonton bookkeeping, but entrepreneurs need to know how to do it, and how to do it accurately so that they can be consistent in their efforts. By having regular reports that they can use to help them make guided and informed financial decisions in their business, can help entrepreneurs ensure that they are making decisions that can help them in business. Since 50% of all entrepreneurs fail in business within the first five years, and 29% of those failed entrepreneurs give the reason as running out of money for why they failed. By avoiding making decisions that could financially harm themselves, business owners can be certain that they are doing what they can to avoid that problem in their business.
Business owners should understand all the various aspects of bank reconciliation reports so that they can use the information to make the best reports possible. The first thing that entrepreneurs should know is what information is entered into a bank reconciliation report? Edmonton bookkeeping says that the information that is entered is the date of their statements, the ending balance of the statement, plus all of the transactions in the period of time that they are reconciling. All transactions from their bank statement, all checks that they have written. Once a business owner has verified the beginning balance of their bank statement is the same as the ending balance of their last bank reconciliation report, and they have entered all of that information, that is is easy as it gets. If they have entered all those transactions automated, the hardest part is done. Doing a bank reconciliation well does not need to take a lot of time, it just needs to be done consistently and with double checks in place.
The next question that business owners should know when it comes to doing the best bank reconciliation report possible, is what does the bank reconciliation report showing entrepreneur when they are done? There are several things says Edmonton bookkeeping that an entrepreneur is going to be able to see from their report: the beginning balance, the ending balance, any incoming deposits, all cleared transactions, uncleared transactions, and registered balances. By understanding each of those various aspects that the records are going to show, business owners can use the information well in order to do in that report.
The next question that entrepreneurs should know when it comes to doing the reconciliation report, is how can entrepreneurs know that their bank reconciliation report is correct? This is an extremely important double-check system says Edmonton bookkeeping that helps entrepreneurs ensure the accuracy of that report. Once they have completed the report, entrepreneurs should check the ending balance of the report to confirm that it matches the ending balance of the statement. Edmonton bookkeeping says that if this is accurate, they should then move onto the second double-check system. If they look at the registered balance and compare it to the GL in their balance sheet if it was done correctly both of those should match as well.
Business owners should not only know why it is important to do bank reconciliations says Edmonton bookkeeping but is also very important that they understand it needs to be double-checked not just at the ending but at the beginning, throughout and as well at the end to ensure that the information is accurate and error-free. Since this is a report an entrepreneur is going to use to make guided and informed financial decisions in their business, be able to do so with as accurate information as possible is of paramount importance. There are several things that entrepreneurs need to know when it comes to creating their bank reconciliation report, that can help them run the most accurate report possible so it can be the best tool to make decisions.
The first thing that entrepreneurs should know when it comes to their bank reconciliation report is how long should uncleared transactions show up on their reconciliation report? Entrepreneurs should understand that uncleared transactions are the transactions that show up if an entrepreneur has entered the transaction into the report however it has not shown up in their bank account yet. Examples of uncleared transactions could be if an entrepreneur has made a purchase on their debit card, but it has not yet shown up in their bank account. Another transactions as Edmonton bookkeeping is a check that an entrepreneur has written that has not been cashed yet. Like the debit example, uncleared transactions usually only take one or two days at most to clear. Therefore, if entrepreneurs are keeping track of uncleared balances on their reports, if they see an uncleared transaction for longer than a single report, it is usually an error. Business owners should look to see if perhaps it was entered in twice, or if the data was entered incorrectly. Both mistakes could cause the balance to appear that way on their bank reconciliation report.
However, if there have been no errors entering those transactions in, and especially if it is a check, business owners are going to want to verify the information. If it is a check, business owners need to understand that checks go stale after six months and become unusable. If a check has been sent out and has not yet been cashed, the business or person who has that check needs to be contacted and asked if they received that payment. If not, a business owner can put a stop payment on that check and reissue it, and if they have received it, it can be a gentle reminder for them to cash it.
If entrepreneurs are aware of all the various reasons why they should do a proper bank reconciliation report, then they will be able to ensure that not only are they doing bank reconciliations on a regular basis, that they do them well, so that they can end up with the best possible report that can help guide them towards making informed financial decisions in their business.