Whether for personal or business purposes, we all use a bank account to track and facilitate our financial transactions. To ensure all transactions are accurately recorded, one should routinely perform reconciliations between their bank account statements and business’ financial information.
What exactly is a bank reconciliation, and how do you perform one for your business bank account?
A bank reconciliation is a process in accounting where a company ensures its business account transactions within their journal entries and ledgers are reconciled with the financial institution’s most recent bank statement. Reconciliation is a vital part of the accounting process. It ensures that the financial information of your business account matches that of the bank’s records.
Rectifying the bank statement against your business account’s financial information should happen monthly, as it is every month that you receive a bank statement. Your account statement will either come in the mail or be accessed online, depending on your banking preferences. This bank statement is a record of all transactions your company made that month.
You don’t necessarily need an accountant or financial professional to reconcile your statements. As the small business owner and account holder, you can rectify the records yourself.
When reconciling your financial statements with the bank’s reports, you must verify that all stated transactions are accurate. The amount of money your company has spent in that fiscal period should match the bank’s numbers.
When performing bank reconciliation accounting, here is a list of transactions you should keep an eye out for:
This end balance will be your starting point for the next period’s reconciliation.
Cash flow management can help your business keep track of its bank account’s ins and outs to make the bank reconciliation process more manageable.
The best way to perform bank reconciliation is to sit down with your business records and bank records for the specified accounting period. Your business records could be your accounting ledgers, journals, or accounting software you use to track your income and outgoings.
Once they are side by side, you can systematically go through each transaction to ensure everything matches. Always examine your end balance last, as this will be your starting point for reconciling the next accounting period. Bank reconciliation accounting should only take a few hours at most each fiscal period, as long as your record keeping is up to date and accurate.
Stay on top of your business’s financial health with QuickBooks reporting functions to make your reconciling process as straightforward as possible.
TAKE A NO-COMMITMENT TEST DRIVE
Our customers save an average of 9 hours per week with QuickBooks invoicing*
By entering your email, you are agree to our Terms and acknowledge our Privacy Statement.
Intuit helps put more money in consumers’ and small businesses’ pockets, saving them time by eliminating work, and ensuring they have confidence in every financial decision they make.
3x WeMoney Award Winner
