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Bank Reconciliation- Why you need it and what it does

Posted On 31/01/2016

If you are a business man, you would have always faced a lot of moments in your life when you caught yourself staring at your bank statements and bookkeeping records, trying to make sense of why they do not seem to tally with one another? If you have, you are not alone and you either do not have a bookkeeper or if you do, he is not worth the money you are investing.

Bank Reconciliation is the method of comparing and matching figures from your accounting bookkeeping records with those that are revealed to you from the bank statement. This comparison reveals how your accounts differ from those that the bank has provided you in their statement. The result is that you can see the unruly items in each list and make them both up-to-date. To keep your financial position in perfect condition in this way is very essential for every business. The procedure of creating a bank reconciliation statement helps a businessman to make their own financial reports whenever needed. This also helps a business man to judge his business’s financial position and thus he can decide on whether to make a certain investment, what his position is in the market and also helps them make other extremely important business decisions.

A Bank Reconciliation Statement also allows a businessman to quickly evaluate a business’s account balances at quick pace and to determine any sort of discrepancies in the accounts. These discrepancies include many things ranging from cheques or transactions recorded for more or less than they actually were worth, known as over and under casting respectively. Apart from this, this reveals transactions that are absent in their entirety, preventing any fraud, etc. for example if a person from the company claims a cheque by fraud, it won’t be present in your books but the bank will show it. This analysis of the bank statement and comparison with your account can reveal this transaction.

A well and regularly made Bank Reconciliation Statement made by a professional bookkeeping service can help you reduce accounting errors by a great percentage. Through this system, it is very easy to find out missing or wrongly entered invoices or general transactions.

A Bank Reconciliation Statement made by a professional bookkeeping service can help you confirm if your balance in your books is the same as the one in the bank statement. Most good companies perform a bank reconciliation process every month so as to keep a strict check on their books. This seems a trifle much at the time but at the end of the year, it helps you to resolve and maybe even avoid major disputes in the balance sheet and other statements of financial position.

A good professional bookkeeping service gives you a bank reconciliation service that keeps your accounts balanced all year round. This helps you keep your accounts correctly reconciled with the bank statement so you get a real world view of each and every dollar you own. A good business should always invest in a reputable professional bookkeeping service to keep its financial position in order and its capital safe.

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