First of all: What exactly is a bank reconciliation?
A bank reconciliation is a monthly accounting process that involves comparing your accounting records with your bank statements.
But why are bank reconciliations so important for businesses?
In this article, we’ll explain the top 3 reasons to reconcile your bank records.
1. To ensure your records are accurate
Performing a bank reconciliation on a regular basis is the best way to ensure that your accounting ledgers are accurate.
You need to compare your accounting records with your bank statements in order to identify any potential errors and address them ASAP before they become a problem.
For example, if you accidentally fail to record a payment in your books, your income will appear lower. This results in paying fewer business taxes at the end of the year. If you discover your mistake too late, you could incur fines. Or worse: you may have to answer to the tax authorities.
It’s better to take the time to perform a bank reconciliation at the end of the month to avoid issues down the line!
2. To monitor your company’s performance
On a related note, failing to record payments or expenses could affect your key performance indicators. A bookkeeping error could make your revenue appear lower than normal for a given period.
Bank reconciliation keeps your records accurate and, in turn, gives you an accurate idea of your company’s performance. You can avoid unnecessary administrative headaches and keep your finances solid.
3. To keep an eye on fraudulent activity
Bank reconciliation also helps you identify any potential fraud in your corporate bank account.
The reconciliation process helps you detect anomalies in your numbers, which in turn makes it easier to locate the source of the discrepancy. Your corporate accountant will need to verify the source of the financial imbalance and may realize that your company has been the victim of fraud. You can then take swift action to minimize damage.
Let T2inc take care of your bookkeeping
So, why is regular bank reconciliation so important?
Because it helps you keep your bank accounts and your accounting ledgers accurate! You can then be confident that your business is doing well and manage more effectively.
Bookkeeping is a time-consuming and meticulous process. As a manager, you may not have the time for this task in your busy schedule.
That’s where T2inc comes in. Our experienced accountants will keep your business in order and help your company succeed. Contact us today for a free quote!