Top Reasons to Perform a Monthly Bank Reconciliation

You may have been advised by your bookkeeper to periodically do bank reconciliations. But why? Isn’t the bank supposed to get it right, to begin with? 

The task of reconciling your financials and the bank’s financial records can seem extremely tedious and time-consuming. You will need to amass all your bank statements, setting them against your ledgers and books to make sure that every single number matches up. As endlessly tiring as it may seem, bank reconciliation is crucial for every company to maintain impeccable financial records. This blog will explain why.

Why Every Business Should Reconcile Their Bank and Internal Statements Every Month

Banks are established financial institutions tasked with proper care and management of your money. However, mistakes still occur. It may sound unnecessary to reconcile the statements, but here are some of the most important reasons to have this process done on a monthly basis.

1 - Catch Any Errors

You will be able to catch wind of any errors on your tax documents and books if you do a periodic check and reconcile them with your bank numbers. It may be as seemingly insignificant as a misread bank receipt, which can snowball into a larger problem if left unchecked.

2 - Avoid Being Caught By Surprise

Frequent bank reconciliations keep you from getting caught by surprise. Whether it’s a vendor with a pending check payment lost in the mail or a client whose check bounced, double-checking ensures every financial transaction is completed and recorded. Failing to reconcile your bank statement against your books could let small mistakes go unnoticed, leading to penalties and other surcharges later on.

3 - Verify Your Cash Flow

This is an advantage for businesses of smaller size that are working with much less capital than those other industry giants. Doing a bank reconciliation will help business owners verify the exact situation of your cash flow. This will help you stay on top of your finances and produce accurate and complete tax reports and documents when the time comes.

4 - Prevent Fraud

If there has been a report of fraud, monthly bank reconciliations will help you catch it as soon as possible. Keep in mind that any compromised credit cards or accounts are bound to be found quickly as long as periodic checks and balances are performed regularly.

5 - Make Tax Season Easier

When tax season comes, it will be easier to create the tax documents and financial statements. In case any mistakes are spotted, you will not need to go back months just to find the start of the error. Rather, simply go through the current statement because you will know full well that you had been reconciling the documents consistently in the past months.

Conclusion

Bank reconciliation is easily one of the most tedious financial tasks to complete monthly. However, it’s too important to be ignored. There is good news: your bookkeeper can handle the job for you! With their skill in picking apart financial statements to find any discrepancies, you’ll be able to rest assured, knowing your records are kept updated at all times.

Should you be in search of a bookkeeping team to help you streamline your bank reconciliation and other accounting tasks, Totally Booked can help! We handle all aspects of bookkeeping including accounts payable/receivables, budgeting, payroll, app integrations, sales tax, custom reporting, bank reconciliations, and so much more. Get the best in bookkeeping services by contacting us today!