My Blog
Blog
Bank Reconciliation and the Benefits of Reconciling your Account.
| Posted on August 18, 2020 at 2:55 PM |
comments ()
|
 YESSSSSS!!!
That Beautiful Moment when you finally reconcile an Account, especially after
battling with the Account for a while - PRICELESS!!! In Case, you are wondering
what Reconciliation is. Reconciliation is the Process of ensuring that your
Accounting Record agrees with your Bank Statement. Performing
Bank Reconciliations helps you spot out Fraud and Reduce the risk of
transactions, that can cause late fees and penalties. The Following are the
Advantages of Bank Reconciliation: 1)
It makes Accounts to be in Good Standing - It makes your Account to be in Good
Standing. When you reconcile your Bank Account, it helps you to be aware about
the Amount that you can spend in your Account, so that you are less likely to
overdraw your Bank Account. You need to keep in mind, that overdrawing will
negatively affect your Credit Score and can prompt the Bank to charge you
fees. 2) It
Prevents Theft - Recording Bank Fees is a Standard Practice as you process your
Reconciliation and it may reveal a transaction, that you have overlooked to
record. By examining further, the available original documents, these
discrepancies will be revealed. Most Importantly, it will reveal the Bank
transactions, that were initiated by unauthorized individuals, who try to steal
money from your Bank Account. 3) It
Helps you detect Accounting Errors - There can be some cases, where your Bank
commits an error in your favor, and this will make you liable to return that
money, even if you've already spent it. By Reconciliation, you will be able to
detect accounting errors that commonly occurs in Business, such as Double
Payments, Addition and Subtraction Errors, Missed Payments and Lost
Checks. 4) It
keeps Mistakes in Check - Banks are usually responsible for implementing
procedures to avoid making mistakes in your Bank Account; unfortunately,
mistakes do happen sometimes, with the most common being a Simple entry error.
Nevertheless, Banks will be able to correct these mistakes when you point them out,
after you complete your Bank Reconciliation. 5) Need
to Record Interest Earned - Businesses may think, that they are Small, so
recording their Interest maybe minor. It is important to keep precise track of
smaller details, since these can add up over time. Also, It may not seem
important now, but as you earn more money and your Principal grows, your
interest may become significant enough that it affects your bottom line. 6) It
reduces Missing Transactions - We have seen several instances, where Banks may
refuse to deposit your Check for reasons like you have drawn on a Foreign Bank
Account. This may require them to reverse the original entry on a Deposit. Bank
Reconciliation is carried to introduce transparency and efficiency into a
Business's Accounting System. 7) It
helps to identify Duplicate Charges - Reconciling your Bank Account helps to
identify duplicate charges, that may be erroneously charged in your Bank
Account; It also helps you to recognize unauthorized charges and incorrect
posting amounts, thereby reaching out to the Merchant Companies and informing
them to refund these charges. 8) It
detects and prevents Embezzlement of Funds from your Company - Reconciling your
Account helps to detect Fraud and embezzlement of funds from your Company. You
are able to track every transaction and determine, where they are coming from,
where the funds are being allocated to and if they were wrongly allotted. 9) It
Helps Business Owners make Sound Financial Decisions - Reconciling your Bank
Account helps Business Owners to make sound financial decisions about the
growth of their Company and helps to identify particular product lines, that
maybe non-profitable. 10) It
helps you track your Accounts Receivables - Cash is King. Reconciling your
Account keeps you on top of your Account Receivables; It helps you know the
true Amount, that your Debtors are owing you. Reconciling your Account allows
you to track your Invoices and reach out to your Debtors to make Payments
promptly. It helps to ensure that you always have Cash available in your Bank
Account. 11)
Reconciling your Account helps you produce Accurate Financial Reports, needed
for your Loan Application - Due to the Pandemic, a lot of Businesses have to
rely on SBA Loans and Government Stimulus to help their Businesses stay afloat.
Having a Reconciled Account helps you produce Accurate Financial Reports, that
can help you obtain these Loans easily, without hassles. Are you
Reconciling your Account Regularly? Are you overwhelmed with your
Reconciliation? We have the latest Accounting Software to help you and Guess
What? We can set one up for you as well. Give us a
Call on 202-422-4586 and We'll help you out. |