According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Irrespective of how the professionals see it, it has always been the most essential operations. As you can see, even the checks that has been processed late.
Defining bank reconciliation
The process of comparing and contrasting the account balance provided by your bank with that of the company’s book of accounts as well as giving details of any discrepancy is the bank reconciliation. You should keep in mind that the discrepancy in the balances may be due to the diverse timing of registering the information in the books and in your firm’s books. Such discrepancy is a typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to an mistake, which has to be manually rectified and to catch this mistake, you need bank reconciliation. The firms generally do the bank reconciliation at the end of the month.
Why bank reconciliation is a must
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. Back log would be eliminated if you follow the rules of bank reconciliation. Furthermore, you can comprehend your accounting status all the time. It is incredibly important that you have solid and reliable communication and collaboration power with the financial system. The bank reconciliation is the basic process in checking the balance on every bank statement on a given date with the account balance in your cash book. Charges at the bank are an additional to the deducted outstanding and amazing deposits. Debit or outstanding orders have always been an additional to the payments.
Too many people in this world have hold a bank reconciliation at some point. There are instances that bank reconciliations cannot balance. And this could be due to the missing information, and the knowledge and skills of the person executing reconciliation. In such circumstances, the bank statements should always be reconstructed.
Depending on the extent and size of the entity concerned, every bank statement for a particular period could include of several pages. If in any case, one page is missing, the reconciliation will not balance. Transactions on the missing page impacts on the result of the bank reconciliation clearly.
If you want to get the most of your company, you need to take care of the money transaction behind the principle of bank reconciliation.
Bookkeeping is basic in working your business in an efficient manner. It is very much important that you have an organized, transparent and most up to date system in place. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.