Author: PJ Yates
Date: 10.18.22
Read Time: 5-Minutes

Reconciliation of your business’ bank account is crucial to remain updated on the company’s growth, yet many overlook its importance by doing it monthly or not at all. Here at Rynoh we often hear from our clients how difficult tax season is for them come year-end. It doesn’t have to be that way though! If you want to manage your accounts correctly, pay attention to the following information.

What is Account Reconciliation?

Although bank reconciliation appears to be easy, ensure you take your time with it. Good thing is, if you understand how to balance a checkbook, then this task will be similar. All you have to do is compare your records with the bank statements if they match up–excellent! Staying up-to-date on your accounts avoids any potential errors that could create a financial mess down the road.

If you find that your two accounts don’t have the same balance at the end of each month, don’t panic. Instead, take a look to see if there is an outstanding payment that hasn’t cleared with the bank yet. This is normal and usually happens with checks taking a few days to process. However, if there’s a bigger discrepancy, then you’ll need to investigate further.

How Monthly Reconciliation Helps

Reconciling your accounts monthly has many benefits, such as spotting suspicious transactions, accounting errors, and bank fees. By taking the time to reconcile your accounts more than monthly, you can ensure that your finances are in order and don’t have to worry about any surprises at the end of 30-Days.

1. Early Intervention

By reviewing your bank account each month, you can avoid any potential issues come tax season. If there are any discrepancies, speak with your accountant for assistance. Most likely, they will be able to fix it quickly and easily – saving you the headache of a longer puzzle to solve down the road.

2. Unauthorized Payments

No one wants to see their bank account balance dwindle, but it’s better to catch unauthorized withdrawals sooner rather than later. Do you have a good handle on where all of your business checks are going? It’s important to verify these payments so that you can be sure no one in the company is making any unnecessary or authorized purchases.

3. Overdue Invoices

Although it’s typically not a problem, regularly confirming that customers’ payments have cleared is good practice. This way, you can avoid any discomfort or issues associated with bounced checks more than a month out. To make things easier on yourself down the line, catch errors as soon as possible so you can deal with them immediately.

4. Bank Errors

reconciling bank accounts helps you stay on top of any errors the bank might make. If your records show a different total, that could be a sign that the bank has wrongly reported a payment or doesn’t have an accurate calculation of what your balance should be. Missing or inaccurate deposits can cause problems down

the line, so it’s important to reconcile and check for anything out of the ordinary, like unexpected fees or late credit card payments.

5. Accurate Accounts

By following the reconciliation tips above, you will be able to know your company’s monthly revenue with confidence. Keeping accurate records throughout the year can help you budget for new business expenses, bonuses, and other plans for company growth. Being aware of all the numbers and facts about your company is always helpful!

Reconcile, or Leave it to the Pros

Many business owners are more than capable of reconciling their accounts, but some would rather outsource the task to a bookkeeper or other accounting professional. The verification process for these accounts can take a while – especially for companies that have numerous transactions each day.

Ready to put your reconciliation on auto-pilot?

Our clients come to us for all types of reconciliation needs, and we’re proud to be your trusted advisors for your business matters. Contact us today and learn how to close your books faster and more accurately with automation. We’d be more than happy to answer your questions!