It’s important to have a bookkeeping and accounting workflow in your business. Reconciling your accounts is an important part of the bookkeeping workflow, and something you may not be doing effectively now. In this episode of MissionBusinessPodcast.com Bernard Roesch explains what reconciliation is, why it matters, and how to go about doing reconciliations in your business.
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What is Reconciling
Reconciling is part of the bookkeeping process where you compare your bookkeeping records to the source of the data. For example, you might compare your bank account register within QuickBooks to the actual bank account at the bank.
- The reconciliation process helps you find certain transactions that are in your bookkeeping records that might not be at the bank, and vice versa.
- This ensures that any data entry errors in your bookkeeping process are fixed, and also helps you follow up on records that aren’t accurate at the bank. For example, you may have sent a payment to a vendor and logged that within QuickBooks, but not see that on your bank statement. This could indicate that the check was lost en route to the vendor which could lead to them thinking your payment is late.
Who Should Manage the Reconciliation Process
It is best practice for security to have someone that is not responsible for entering the transactions conduct the actual reconciliation process. This ensures there is a third party checking the work of the data entry bookkeeping process. If it’s not realistic to have someone else in your business manage the reconciliation process, or do it yourself, you could have your bookkeeper produce the reconciliation report as long as you review it carefully before considering the books closed for this accounting period.
How to Review Reconciliation Reports
If you’re going to have your bookkeeper prepare reconciliation reports for you, there are a number of things for you to review on that report.
- First, compare the bank balance on the report versus your actual bank statement. This will help you ensure that the records at the bank directly match the records in your books.
- Next, review any reconciliation items that are pending. For example, checks that are recorded in QuickBooks, but not yet posted on the bank statement.
- Investigate why these items are still pending. Also, briefly review the transactions on the reconciliation report. Scanning through transactions is one potential way to find odd transactions to ask your bookkeeper for more information on.
Setting the tone of thorough review is also an important factor to deter fraud and theft related to bookkeeping.
We Can Help You
If you need support implementing the reconciliation process into your bookkeeping workflow, contact Bernard today.
You can also visit MissionBusinessPodcast.com for more insights that Bernard has been sharing with us in the previous episodes.
Need to find the right QuickBooks software for your business? MISSION Accounting can help.
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