Bank Reconciliation

business-services

Here at AFS Taxsavers we know the significance of carefully monitoring one’s finances. Keeping detailed accounting books is absolutely essential for just about any business, and maintaining their accuracy is, of course, of the utmost importance. However, proper accounting is about more than simply recording what your company currently has available in terms of funding. It must also take into account what your company will have, to ensure that your budget stays on track. This is why the process of bank reconciliation is so important.

The Importance of Bank Reconciliation

bank-statementBank statements arrive at the end of every month and are intended to be a record of your company’s current financial status, keeping track of all of the activity that account has undergone since the last statement was filed. This includes matters like checks, deposits and other expenses. However, this statement may not present an entirely accurate picture of your business’ financial status. Many companies send out tens or even hundreds of checks a month, meaning that the amount indicated on your statement may not actually be an accurate representation of the amount of money you’ve spent during that period. For example, expenses which are recorded at the end of one month might not be reported until the following month’s statement. Therefore, it is essential to verify that the amount of funds recorded on your bank statement do in fact reflect the amount of capital in your account. If it does not, this discrepancy must be recorded on the books to keep your budget in line. This process is called “bank reconciliation.”

The Process

The first step in the process of bank reconciliation is to identify any and all factors which could have influenced your balance without being recorded on your bank statement. For example, your company might have some made some deposits which were currently in transit at the time your statement was calculated. You might have some outstanding checks which have not yet cleared. Finally, banks sometimes just make mistakes. They might have entered an incorrect amount somewhere down the line or forgot to add a certain item while calculating your total. Such errors will be found and corrected during the course of this process. Next, your books will need to be adjusted in regard to the policies of your particular bank. Often these fluctuations will have little to nothing to do with your own actions, only those of your chosen financial institution. Various factors will need to be considered. What kind of service charges might your bank have deducted from your account? What are your interest rates? Have any of the checks you’ve attempted to deposit not cleared? These are all important details to consider. Once the process is complete, the amount noted in your books should be identical to the number calculated to be in your account. With all of these things under our microscope we’ll be able to calculate your true balance with impeccable accuracy. Let us uncover your true potential and show you what a difference AFS Taxsavers can make.

Bank reconciliation will allow you to:

  • Get a far more accurate picture of your financial situation.
  • Know precisely how much money your company currently possesses.
  • Ensure that you’re staying on budget.
  • Correct any errors made by your financial institution.
  • Confirm the accuracy of your records.
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