Every business account must show the true digits; this can be achieved when they are reconciled properly. The business owner should ask the bookkeeper to undertake the account reconciliation process for the proper account maintenance.
The main aim is to target the accounts which show increased or decreased numbers in comparison to their source document.
A sudden discrepancy in the regular pattern of your accounts as a result of an unknown and uninformed external factor should be checked. This check can only take place with the help of the reconciliation services.
It is a general thing that when your accounts are reconciled properly then, they will show a positive effect on the balance sheet.
You will get relief from getting caught in between the numbers at the month or year-end, as there is financial accuracy in your records.
Need of Account Reconciliation Process for Business
As a business operates day-by-day, the number of transactions occurred gets turned into ledger accounts.
Through ledger accounts only, further income statements are generated and are presented to the stakeholders.
Unfortunately, when your in-house accountant has made a mistake during the transaction recording, it should be addressed immediately.
For example, your bank account has been credited with $100,000, and while recording this, your in-house bookkeeper recorded this as $10,000. That one digit can make the whole process get derailed.
That’s why they need for account reconciliation process exists.
In this process, the accountants streamlined every business account in the general ledger. Then, they verify whether the outgoing balance is correct and accurate.
The two main comparing components included in this are:
- Your general ledger
2. Independent sources of data (bank & credit card statements)
If any discrepancy is detected by the accountants, then they must investigate thoroughly to correct that error. It will certainly involve correcting the journal entries to correct balance errors.
At this point, all information which is found by the accountants is analyzed properly and then it is stored for the audit purposes.
Accounts Reconciliation Process | Benefits to the Business
Generally, when you reconcile your accounts on time, it will surely provide you the benefits.
The benefits of
- Having financial accuracy
- No month-end rush
- Time & Cost reduction
Financial Accuracy
When your accounts are showing the right digits in the right ledger balance, then it means your company’s financial base is strong.
With the assistance of accounts reconciliation process, you can achieve financial accuracy.
And the financial accuracy comes with the automation which the virtual bookkeepers have. This is when each of your transaction is recorded by the system real-time. And then moved into the correct ledger balance automatically. This will lead to 0% financial errors while recording the transactions.
No Rush During the Reporting Time
When every transaction is recorded accurately, then you won’t get succumbed to any hassle during the reporting time.
Generally, the reporting time turns out to be a mess, when your invoices are not fed into the system, proper balance sheet reconciliation is not maintained, etc. You should avoid these happenings, as they will only give a loss to your business at that time.
You can file your taxes and other documents to the tax authorities on a timely basis.
Time & Cost Saving
This process helps you to save you from paying unnecessary fees, like, late fees & overdraft fees; caught an act of embezzlement; keep transactions error-free.
Bank Reconciliation Service assists the business in rectifying the suspense accounts. Generally, the suspense accounts are the one which does not have any source data about them. But by this process, when you start from the beginning then you can get to the accounts, which should be really get hit in the first place.
When your accounts are free from any illegitimate findings, then it will save you lots of time. As you don’t have to go again and again and rectify them.
All the negative activities can get caught with the accounts reconciliation process.
Basically, the virtual accountant can present accurate and reliable financial statements, as reconciling your business accounts as compared to the in-house bookkeeper.
The primary example of this process is the balance sheet, as it shows all the assets and liabilities. If your balance sheet is properly reconciled, it gives a sense that all of the accounts in that are reconciled properly.
Steps to Smoothen up the Bank Reconciliation Process
Automation
Instead of taking the route of the manual working, the business owner should certainly use the automation process for this. Being an expensive one, you can opt for this service by handling your financial tasks to the virtual accountants.
Cloud Accounting
When all of the data is situated at only one place, and it is easily accessible, then it can surely ease up your bank reconciliation process. You can access you any financial data from it for the reconciliation purpose. Generally, this is also expensive, but you can easily avail this feature from the virtual accountants.
Make Accounting Policies and Procedures Easily Accessible
There should be an accounting policy and procedure for every business account. Provide your bookkeepers appropriate time & training to understand your needs – what you expect from them. When they will learn about your targets, then they can work towards it.
Investigate Errors
Every error should be thoroughly investigated with the proper expert advice. Your bookkeeper should be answerable to your queries raised & errors incurred. Generally, in-house bookkeepers investigate about the error in their shift timings or when they are available in the office. On the contrary, virtual bookkeepers have a dedicated team to help you out when you are in the situation.
Data and Documentation
Every document whether source document or financial data should be stored in a centralized form that you can have access from anywhere. Generally, source documents are primary data from which you can match your digits. So, it would be better if you keep all of the data in a secure form, and can easily avail when you require it.
Closing Words
Account Reconciliation Process, which includes the Bank Reconciliation Process, is a must for the business, as all the relevant business accounts get reconciled.
Keep a tab on your accounts, and make sure the errors are dealt with the precise knowledge. The main components required for the reconciliation process is source document and ledger balance.
With the assistance of these two, you can have the required account reconciliation process.
To get started with your accounts reconciliation services, you need to get in touch with one of our experts at Accounts Confidant on +1-866-301-2307.
