Bank Reconciliation Statement Cutting Your Business Costs
According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should be done. Checks which are processed very late can be bounced, if there is a sufficient stipulation for it has not been done in the business books.
What is bank reconciliation?
The process of comparing and contrasting the account balance provided by your bank with that of the company’s book of accounts as well as giving details of any discrepancy is the bank reconciliation. You should consider that the discrepancy in the balance may be due to the timing brought differently in registering the information in the books and in your company’s books. Such discrepancy is a normal or typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to a single mistake, which has to be rectified on hand and to catch this mistake, you need bank reconciliation. The corporation do the bank reconciliation every end of the month.
Why bank reconciliation is a must
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. As a result, back log would be eliminated. Moreover, you will understand your accounting status all the time. It is important that you have a reliable and prompt communication system with the financial institution so that you keep your records apparent and precise. The bank reconciliation is the basic process in checking the balance on every bank statement on a given date with the account balance in your cash book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Outstanding or debit orders are additional to the payments.
At some point in their lives, a lot of people hold a bank reconciliation. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to the missing information, and the knowledge and skills of the person executing reconciliation. In such instances, the bank statements should be reconstructed.
There are several pages behind the size and extent of the corporation concerned. The transaction will not balance if there is one page missing. Transactions on the missing page impacts on the result of the bank reconciliation clearly.
If you want to get the most of your company, you need to take care of the money transaction behind the principle of bank reconciliation.
Bookkeeping is basic in working your business in an efficient manner. It is very important that you have a transparent, organized and updated bookkeeping system in place.