Bank reconciliation reports are extremely important because they are tools that entrepreneurs use in order to make informed financial decisions says Edmonton bookkeeping. Therefore it is important not only that entrepreneurs do bank reconciliations on a regular basis, but it is also extremely important that they know how to do them well. As Michael Gerber, the author of the book the E myth has said, “the work we do is a reflection of who we are. If we are sloppy adders, it is because were sloppy inside. If we are late at it, it is because we are late inside, if we are board bias, 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 mere how we are inside”. If entrepreneurs can get into the habit of doing bank reconciliations well, they can be certain that the reports are a great tool they can use to ensure the information that they have to make financial decisions with is accurate.
In order to do a bank reconciliation report, entrepreneurs should gather three things to start: they need bank statements for their business bank account, the previous bank reconciliation report, as well as a list of all checks that they have written in their business in the past month. If entrepreneurs are only relying on the checks that have already been posted to their bank account and are in their bank statement, this can cause them to have errors. Not all checks that they have written will have been cashed yet, and will not show up in the bank reconciliation report. Therefore, it is important that business owners have a list of all of their checks so that they can take into consideration transactions that they have scheduled to come out of their bank account, that has not come out yet. This is an important differentiating factor between the bank reconciliation report and their bank statement.
Edmonton bookkeeping says that not only is it important for entrepreneurs to have all of the appropriate information, but they need to start by doing double-check. Many entrepreneurs think that simply because they verified the information at the end of the report last month they do not need to do it again, however, this is not true. If additional transactions happened after they finished the reconciliation report, they may have to re reconcile the report. By verifying the information before they start can help entrepreneurs ensure the continuity of the information so that they can ensure the accuracy of the report overall. If they miss this step, then they may end up with the report that is completely out and they do not know why.
By doing a bank reconciliation report as well as Edmonton Bookkeeping, entrepreneurs can be certain that they’re ending up with the report that helps them make guided financial decisions that can have them avoiding running out of money in their business.
It is not just important for entrepreneurs to be doing bank reconciliation reports on a regular basis, but they need to be doing them well says Edmonton bookkeeping. This means, setting aside the time to focus on it that they can be uninterrupted, as well as doing several double-check systems throughout the process and at the end so that they can ensure that their ending up with a report that shows all the money that they have to work within their business so that they can make decisions such as running payroll or paying bills without running out of money.
When entrepreneurs are entering all of the transactions that happened in the past month from their bank account into their accounting software, they should be ensuring the accuracy of that information. The way they would do this is simply by double-checking all of the transactions once they have been entered against the bank statement. If they are doing this manually, they need to verify that there is no human error that may have caused the incorrect information to be entered. The total, the date or accidentally entering information twice, or missing it altogether are your ways that transactions can be entered incorrectly. Business owners also need to understand that if there are having an automated system update their software for them, they also need to be doing a double-check to verify that there were no population errors when pulling the information from their bank accounts directly into the software.
Once an entrepreneur has verified all of the transactions were correct, they will end up with the reconciliation report. There will be a list of uncleared balances in that report that entrepreneurs need to review. What uncleared transactions are said Edmonton bookkeeping, are transactions that have been accounted for, that they have not appeared in the bank account yet. This could check that is written but not yet cashed, amounts from a point-of-sale machine that has not been entered into the bank yet. These are very important to review because while most uncleared balances only take one or two days to clear if business owners see the same balances occurring from month-to-month, it could be due to an error. If entrepreneurs can verify the accuracy of that information, they can either fix the error and ensure that those uncleared balances get taken off the report. If for example, it is a check that has not been verified is an error, a business owner might want to call the person with that check to verify they received it, and remind them to cash it. Since checks get stale-dated and are unusable after the six-month mark, business owners want to do everything that they can to avoid having a check going stale.
Edmonton bookkeeping says that by doing these important double-checks throughout the bank reconciliation report process, they can end up with the best report possible that they can use to make great financial decisions in their business.