Sometimes your current bank account balance is not a true representation of cash available to you, especially if you have transactions that have not settled yet. If you’re not careful, your business checking account could be subject to overdraft fees.
You should perform monthly bank reconciliations so you can better manage your cash flow and understand your true cash position. Read on to learn about bank reconciliations, use cases, and common errors to look for.
- Review: What are bank reconciliations?
- Bank reconciliation use cases
- When to do a bank reconciliation
- How to do a bank reconciliation
- 1. Compare your bank statements
- 2. Add bank-only transactions to your book balance
- 3. Add book transactions to your bank balance
- 4. Compare both adjusted balances
- Common errors and how to avoid them