Bank Reconciliation and Credit Card statements do not although guarantee your financial statements are 100% correct, it does eventually get you a lot closer!
For instance, Record-Keeping all deposits as Income if some are loans, for instance, will cause misstatements on financial statements even though the bank statements are reconciled correctly. An error in financial statements can lead to one of the above explained errors.
View your online banking on a daily basis, reconciling can definitely ensure the following:
- Ensure that all transactions related to your bank and credit card statements have been recorded in a proper manner.
- Do not record duplicate transactions.
- Duplicated deposits generally cause overestimation of your income.
- This further leads to a higher probability of getting tax liabilities.
- Bank account balances and credit card balances are accurate on the financial statements.
- There is a high possibility that more likely that coding errors will be recognized and rectified.
- More likely that you will discover fraud. Most banks will only let you dispute a charge within 30 days of the bank statement ending date.
- More likely to catch hold of bank errors. Yes, even the bank sometimes makes errors.
Broadly speaking in case of reconciliation you are able to clear four different types of records:
- Bank Deposit: a group of Cash Receipts and/or Journal Entry Lines
- Cash Receipt: a single Cash Receipt
- Cash Disbursement
- Journal Entry Lines
It goes without saying; reconciling the information with regards to your reconciliation services on both your bank account as well as your financial statements stand in need for skills, time & comprehensive record tracking, tasks that you might not have the time or assets for.
Why Bank Reconciliation is Vital for Your Business?
It’s an obvious fact that Cash is King. It is the breakdown of your company if not managed properly.
Furthermore, small business owners wear many hats on a daily basis. As a matter of fact, they often don’t find the time to reconcile these accounts.
By reconciling monthly statements and analyzing general ledger accounts, business owners are able to make sound financial decisions about the growth of their company and identify particular lines that can be non-profitable.
Monthly Bank Statement Reconciliations Services allows a business owner to:
- Analyze lost checks, deposits, and unauthorized wire transactions.
- Discover and put an end to unjustified bank charges and ensure transactions are posted correctly by your bank.
- Distinguish and prevent fraud of funds from within your company.
- Safeguard yourself. Timely reconciling and prompt disagreement or objection to your bank regarding unauthorized, fraudulent or forged checks presented to your bank and paid by that bank, may allow you to alleviate your business of responsibility for the shortcoming and transfer the risk to the bank.
Therefore, Credit cards and business lines of credit have become the backup bank accounts in small businesses, so reconciling your business credit cards and lines of credit are as important as reconciling your bank accounts.
On the other hand, Reconciling your Credit Card Accounts allows Business owners to:
- Classify duplicate charges, unauthorized purchases, and incorrect posting amounts.
- Resolve your true liability even though transactions may not have posted yet.
- Account for online purchases or purchases with missing receipts.
- Administer your credit more effectively and minimize interest charges and late fees.
Putting the pieces in sync with a General Ledger.
The centermost of your company’s financial records are the general ledgers. These records contain the significant “books” of your accounting system. Evaluation of details pertaining to your general ledger per month. Now you will be able to analyze any discrepancies such as double billings or any unrecorded payments.
Fixing the variations as soon as possible ensures your books accurate.
What are the various advantages?
Following are the benefits of the appropriate monthly bank reconciliation for a business firm:
- The checks which aren’t recorded legally can be followed.
- By utilizing this procedure unauthorized wire exchanges can be found.
- Bank charges which are unwarranted can be followed and the right posting of exchanges can be made.
- Uncover and keep theft of assets from inside your organization.
- Bank Reconciliation can likewise aid in getting away from legal offense or punishment.
- By demonstrating unapproved or produced checks at the perfect time, you can maintain a critical distance from the odds of money inadequacy or some other threat to the business.
Different agreeable circumstances of reconciling your credit card accounts:
- It helps in observing the phony charges, illicit buys and wrong posting sums.
- It pitches a chance to track the genuine liabilities of the business.
- The buys with missing receipts or online buys can be recorded.
- The fraud charges and late expenses can be overseen and limited.
- It likewise aids in setting up a right broad record.
- By setting up a right broad record you can safeguard that the organization’s money related records are looked after appropriately. Any irregularity like twofold billings or any unrecorded installments can be effectively settled and the precision of the books can be kept up.
How Does it Affect Your Cash Flow?
It’s a proven fact that bank and credit card reconciliation is a critical task within any business periphery.
It’s how you try to relate and understand the position of the cash of your business, diagnose when clients haven’t really made the payments on time and it’s what permits you to forecast and plan your financial layout for the future.
On a broader perspective, there are few business enterprises who do not practice bank and credit card reconciliation services, however, on the other hand, there are a couple of companies who do follow the same but have a checklist approach rather than ensuring thorough research. Red flags go unnoticed, customers continue to go on without making a payment and surprisingly you end up in the red without knowing how.
Following are the various ways through which bank and credit card reconciliation affects your cash flow:
1. Elevated Control
When the decision-makers have all of the information they need, correct and up to date. This facilitates in best conclusion making.
2. Improved Cash Flow Forecasting
With the onset of the improvised financial prognosis, effectiveness comes an increase in cash flow management which automatically directly impacts how you manage your cash on a day to day basis.
3. Enhanced Fraud Discovery
Sadly, hackers, criminals, and even common thieves are all beginning to switch their gaze to businesses. They routinely have bigger bank accounts that weren’t checked on a regular-basis or either in close observation, thus it takes a long time before businesses actually notice something is wrong.
By then they could have stolen a symbolic amount of money – but not with our help.
Bank and credit card reconciliation services is a healthy way to help lower down the chances of risks of fraud. It is also quite obvious that these services create a strong foundation to take rapid and streamlined financial decision making. Also, we have now understood the fact that it is really imperative for an organization to undergo credit card reconciliation process at regular intervals in order to ensure that you have not missed any business deductions. Credit card reconciliation also aids an organization to make sure that a bank or a credit card company does not perform any errors. Furthermore, reconciliation accounting business gives you precise data which can eventually be used for taking decision-making. The primary advantages of reconciliation accounting work are to get a high quality of work as per your needs with reasonable rates.
Accounts Confidant believes in getting an understanding that as an entrepreneur it is not a cakewalk to handle day to days tedious tasks like Bank and Credit Card Reconciliation Services, so when it comes to Bank and Credit Card Reconciliation Services, in case you have any questions regarding this topic that you were not able to perceive, please talk one on one with one of our accounting experts here at Accounts Confidant directly by calling us today on +1-866-301-2307.