Not only is it extremely important for entrepreneurs to be doing bank reconciliation reports in their business says Edmonton bookkeeping, but they need to be verifying the accuracy of the bank reconciliations. If they are not verifying the accuracy in several stages along the way, business owners cannot be confident that the information in the report is accurate, and they cannot use that information to make better financial decisions in their business.
There are several ways that entrepreneurs can verify the accuracy of that information, which can help them any time they are going to make a great decision in their business. The first way to verify the accuracy of their bank reconciliation report is by double-checking it before they even get started on the report says Edmonton bookkeeping. In order to do this, entrepreneurs need to look at the last bank reconciliation report and their current bank statement. They need to verify that the ending balance for the bank reconciliation report is the same as the starting balance for their bank statement. If this happens to not be the same, that could be because additional transactions were made after the last reconciliation report, and all an entrepreneur will need to do is re-reconcile the previous month’s balance. By be reconciling the balance, business owners can be certain that they are starting their new reconciliation report from the correct place.
Another thing that entrepreneurs should do to verify the accuracy of the information says Edmonton bookkeeping, is to double-check the transactions that they entered into the report. This is extremely important because human error can cause all sorts of entry errors, from dates to amounts, and Edmonton bookkeeping says the more transactions that have happened in a month, could exponentially increase the number of potential errors. Many entrepreneurs are using software like QuickBooks online, which has an automated feature that allows transactions to be automatically populated into the software. If entrepreneurs are using this, they still need to double-check the transactions. To verify that the information was uploaded accurately, business owners need to do this double-check system by comparing the information that was uploaded against their bank statement. Even with this double-check system, the automated process makes it faster and more accurate.
Many entrepreneurs do not understand why they would use the automated feature of the bank feed if they still have to double-check every transaction. Edmonton bookkeeping says that even with a double check in there, the automation that pulls the information directly from their bank account and enters it into their software, still means that it is faster and more accurate than manually typing it in.
By learning how to do a great bank reconciliation report, and verifying the accuracy of it several ways, business owners can use that report confidently to make great financial decisions that can help them avoid running out of money in their business or making decisions that could cause significant financial strain.
When it comes to the finances of their business, Edmonton bookkeeping says that entrepreneurs should be setting aside time to work on it so that they can verify the accuracy of their reports. If entrepreneurs do not set aside the time to do it, they may end up running out of time and rushing through it which can make them not be careful enough to ensure the accuracy of the information. Also, if they do not set aside the time they may get interrupted several times which would cause them to not be focused on having the right information in the report. Not only should entrepreneurs set aside time to do their bookkeeping properly, but they should also get into the habit of double-checking it regularly, to ensure its accuracy. This is especially true when they are doing bank reconciliation reports. There are several ways that entrepreneurs can review their information to ensure the report is as error-free as possible.
Since 50% of all entrepreneurs fail in the first five years, and 29% of those failed entrepreneurs say the reason why they fail is that they ran out of money in their business, is owners should consider the reconciliation report an extremely valuable tool for helping them make better financial decisions in their business. As is owners need only to have three things in order to properly reconcile their bank account. They need to have their bank statement, their previous bank reconciliation report, and a record of all checks written in the month. Whether those are check stubs, a list that they have written, or a report from their accounting software, it is important that business owners look at the checks that they have written, and not the checks that have already cleared the account, because that will have them missing several checks in their report.
While many entrepreneurs are using accounting software such as QuickBooks online, business owners will actually need to have fancy software because they can even do a bank reconciliation if there using an Excel spreadsheet. However, if entrepreneurs are using the software, there may be automatic features that allow transactions to be updated directly into the software without having to manually enter information. If business owners are using this, it can save them significant amounts of time, but they should be ensuring that even with that time that they get saved, they should spend a bit more of it to double-check the accuracy of the transactions. Even though it is less likely that the automated process is going to have errors, business owners should still be double-checking it.
Once they have completed the reconciliation, business owners should ensure that they are also double checking it at the end to verify its accuracy and that the next time that they are scheduled to do the bank reconciliation report, that they start it the same way they start that this time, by checking the current Inc. statement against the ending balance of the report. By always doing this consistently, business owners can ensure that they are starting the report off on the right foot.