Do you know what bank reconciliation is?
Bank reconciliation is an accounting process, often performed monthly, that compares your accounting records with your bank statements to ensure that the figures they contain are consistent with each other.
But do you really need to do this?
In this article, find out why bank reconciliation is important for your business.
Bank reconciliation keeps your accounting records accurate
Performing a bank reconciliation on a regular basis is an excellent way to ensure that the information in your ledgers is consistently accurate.
In fact, comparing your accounting records with your bank statements will allow you to quickly identify potential discrepancies and resolve them quickly. This could help you avoid making costly mistakes.
For example, if you accidentally omit a payment from your books, your income will appear lower. As a result, you'll pay less business tax at the end of the year. If you find out about this mistake too late, you may have to pay a penalty or, worse, you may have to justify it to the tax authorities. Better to make the effort to reconcile at the end of each month than to have to deal with this kind of problem!
Monitor your company's performance with a bank reconciliation
Similarly, omitting to record certain down payments or expenses could affect your key performance indicators. For example, your revenues may appear to be lower than you expected for a certain period of time, but in reality this is only due to a bookkeeping error.
Accurate accounting records, supported by bank reconciliation, can help you more accurately monitor your company's performance. This can prevent much confusion with your company's administration and keep your business in good shape.
Bank reconciliation to detect fraudulent activity
Bank reconciliation also allows you to identify potential fraudulent activity in your corporate bank account.
Since bank reconciliation allows you to efficiently detect errors and discrepancies in your figures, it becomes easier to find the source of the problem at hand. Checking the source of the financial imbalance could make your accountant realize that you have been a victim of fraud. You can therefore act quickly to limit the potential damage.
Let T2inc take care of your bookkeeping
In short, bank reconciliation is important to perform on a regular basis, since it allows you to confirm the accuracy of your bank accounts and accounting ledgers. You can then be confident that your business is doing well and better manage your company.
Bookkeeping is a time-consuming and rigorous process. As an administrator, you probably don't have the time to add this task to your already busy schedule.
Therefore, leave it to T2inc. Our experienced accountants will help you keep your business in order and contribute to the success of your company. Contact us today for a free quote!