Have you reconciled your Bank Statements lately? Just a Reminder, We have only a few days left to the end of the Year. Very Soon, It will be Tax Season and you will need to submit your Financial Statements for Tax Filing. Can you confidently say that your Company Accounts are updated and reconciled?
It is very important to reconcile your Bank and Credit Card Statements at the end of every MONTH. A Bank Reconciliation is the balancing of a Company's Cash Account Balance to its Bank Account Balance. It is important to ensure that the Cash Account and Bank Account Balances match. The Main Document used for Bank Reconciliation is the Bank Statement.
There are great benefits in reconciling your Accounts and we will be looking at a few of them today. These Benefits include:
I have listed a few of what I discovered in my years of engaging Bank Reconciliations for my Clients. For easy assimilation, I will categorize them as Internal and External Observations:
1) Pilfering Employees/Employees that steal from the Company.
2) Cash Registers not closed out.
3) Bank Deposits not being timely deposited by the Employees.
4) Cash Advances and Loans taken by Employees are not properly accounted for.
5) Unauthorized Purchases made on the Company's Credit Card.
6) Forged Checks being endorsed and cashed at the Bank.
7) Managers taking Clients to a strip club on the company's Credit Card (Yes, This Happens).
8) Rampant Starbucks purchases on the Company Credit Card.
9) Wrong Recording and Classification of Loan Accounts, Line of Credits and credit Card Accounts.
EXTERNAL OBSERVATIONS :
1) Customers reversing charges, without the knowledge of the Business Owner.
2) Automatic Payments increase by the Bank.
3) Utility Companies like Telephone/Internet Companies billing Clients twice in the same month.
4) Fraudulent Purchases on the Company Credit Card.
5) Match.Com Payments made on the company Credit Card.
6) Unauthorized Withdrawals by the Banks ( Inadvertently claiming the Business Owner authorized it).
7) Bill Payments issued via Bill Pay were not mailed out by the Bank to the vendor issued, hence the business Owner incurs late charges for Non Payment of Bills.
8) Over $3,500 in Annual Bank Fees for Overdrafts/NSF/Late Fees.
We can see that most of these items are charge worthy and I have seen a lot of Business Owners experience One or more of these errors because they don't reconcile their Statements. We need to have internal and external procedures in place to get our accounts reconciled. If you have not been recording your transactions from the beginning of the year and have not reconciled them, the best time to start is NOW.
Please do not feel that it is a waste of time to reconcile your accounts, you never know, you may have been losing a lot of cash under your nose. Try to take a look at your account today and begin to experience increased Cash flow. If you feel that you don't have time to get to your Bank Reconciliation, Feel Free to Give Us a Call on 202.422.4586. We are always available to help you.