Bank reconciliation is a technique that makes handling accounts easier as it allows you to cross-check every transaction that occurs. Reconciliation takes place after a regular interval of time for example on a monthly basis. It ensures the smooth and reliable functioning of the bank account. Bank Account Reconciliation Services have made banking a lot easier and accurate for businesses.
How does Reconciliation assure Accuracy?
Bank Reconciliation Services reduce the errors that could have been caused at either end by verifying all the records. It ensures more accuracy, the bank statement balance of the customer is reconciled, with the balance in the client’s financial software, the results from both the ends should be same to ensure that no theft or fraud has taken place. Hence It ensures accuracy.
All the accounting errors can be removed by account reconciliation as it helps you to identify the errors easily. It is a crucial step that needs to be performed to ensure that there are errors in the record.
Apart from detecting errors, it can also help in omitting mistakes as the entire data is verified twice, for example, if an entry is missing or there is an error in any entry it can be corrected by validating the entries with the bank. If you find entries that were initiated by unauthorized individuals then you can contact your Bank to protect your account against fraud or theft. If reconciliation is done on regular basis it helps you to increase the accuracy of your account and helps to calculate accurate taxes as well.
Reconciliation also gives you a better understanding of your bank account as after doing that you can spot transactions that are recorded by the institution but are not in your financial records. It also provides more accuracy and transparency about where your money is being spent.
It reveals which cash transactions have been cleared with the bank and which of those are still outstanding. There might be a situation when you fill out a slip with many entries but by mistake leave one check. With Reconciliation, this mistake can be easily rectified as you can ask for the pending payment after checking your entries. As you have better knowledge about your transactions you can easily prevent the overdraft and manage bounced checks.
With all these examples one can realize that reconciliation on regular basis is important for accounts as it helps to assure safety and accuracy. Also, it helps to avoid any loss as all the transactions are crosschecked at the time of reconciliation. Along with accuracy, it also saves the customer from legal troubles ad it assures you are running a legitimate business. Also, it helps to keep a track of transaction status and receivables tracking. Hence, it can be realized that Reconciliation is a crucial step in ensuring accuracy for the customer.