Bank Reconciliation Benefits in Accounting - What to Know

Although bank reconciliations are not the primary objective of accounting, they are still a critical part of the accounting process. Accountants reconcile bank statements to identify any errors or inaccuracies. That helps determine fraudulent or inaccurate transactions between cash and bank statements. 

How to Perform a Bank Reconciliation?

An unbiased judgment is crucial in ensuring a successful bank reconciliation. Businesses and other institutions need to relate their current bank's records and their passbook. When there is a discrepancy between the numbers, it is vital to identify the cause of the mistake. A QuickBooks bookkeeper can check each data carefully and note unusual entries for analysis after a bulk inspection. In doing so, they can determine if the problem is a missed data entry or a fraudulent transaction.

The Benefits of Bank Reconciliation 

Take note that bank accounts for businesses have lesser protective features compared to individual accounts. That’s because the federal law states so. As such, when companies notice a discrepancy, it is essential to remedy the problem before it escalates into an unimaginable mess. Here are the benefits of using bank reconciliation accounting for your audits:

1. Catch Frauds

Large corporations trust their people to handle significant financial transactions. With the power to access the company's funds, it is easy for opportunistic executives to cite a fraudulent transaction. A large number of employees also makes it hard to pinpoint illegal transactions. However, bank reconciliation makes that possible by identifying one error in the statement, which stops the offender from repeating any mistake before they can extort a considerable amount of money.   

2. Fix Administrative Problems

A QuickBooks expert can pinpoint administrative problems. When this happens, executives can perform corresponding actions that help solve the root cause of the problem. Aside from streamlining cash flow, bank reconciliation also helps to improve the recordkeeping system and client auditing processes. 

There are a few administrative concerns that bookkeeping services can help you with your auditing. You always know the exact money currently in your account. You also experience decreased chances of bouncing checks. You avoid insufficient balance fines and bank errors. Lastly, they help record the status of customer payment.

3. Monitor Interest and Fees  

Unknown to the typical consumer, banks have spontaneous fees and interest rates, which change in as fast as 30 days. If you are not updated with the current figures, you might encounter errors in your auditing process. Luckily, a QuickBooks expert can handle all your worries without breaking a sweat.

Conclusion

The best example that highlights the use of bank reconciliations is when a bank book balance is not equal to the bank's passbook balance. When this happens, accountants must reconcile this difference and pinpoint the problem area that caused the accuracy. Bookkeeping services recommend utilizing bank reconciliation to help determine and remedy errors in their books, which might be caused by fraud.

We are QuickBooks experts in New York that can handle your bank reconciliation. Reach out to us today to see how we can help audit your bank statement and bank accounts.