Do you annually reconcile your bank statements? This is just the beginning, but if you want to expand your company, you must be able to see your cash flow clearly, detect fraud, and comprehend the different types of fees you are paying before it is too late to stop it. However, a lot of businesses perform a weekly or monthly bank reconciliation. It entirely depends on the type of business.

For any small business, a proper bank statement reconciliation is essential. Even if you don’t have an accountant on staff, you still need to perform this procedure every month. Verify that everything adds up whether you use financial accounting software or just keep track of your bank records.

Bank Reconciliation Statement

Bookkeepers prepare a BRS statement on a specific date to compare the bank balance listed in their cash book to the balance listed in the bank’s passbook. The statement allows you to distinguish between the two statements. BRS can be created by a business at any time during the financial year.

Certainly, there is no specific time for preparing BRS. The main goal of this assertion is to find mistakes made when recording transactions. Additionally, it indicates that a company’s bank balance and financial records are current and accurate as of a particular date. You can identify irregular payments as a result. Your financial management will be more up to date and less likely to have irregularities the more frequently you prepare and generate BRS.

Why Should You Prepare a Bank Reconciliation Statement?

Detecting Errors

Even with stringent control measures in place, accounting mistakes can still happen. These mistakes may go unnoticed and be expensive if businesses don’t reconcile their bank statements each month. For instance, if a bank statement shows a deposit incorrectly, the company might not have enough money to keep operating. The reconciliation procedure offers a second check to prevent errors.

Monitoring Transactions

If customers are complaining that they haven’t received their money, it’s possible that a cheque was misplaced in transit. Cheques that haven’t been cleared can be found when you reconcile your bank statement each month. This will make it easier for you to find any potential missing payments. Additionally, you can check that your other business transactions are successful and have been calculated for the correct amount using your reconciliation statement.

Keeping a Close Eye on Business Performance

Small business owners may be unaware of potential income issues or shortfalls if they do not take the time to reconcile their bank statements personally or at least get an overview of the results. While delegation can improve your management of your business, you must be able to monitor every aspect of it. You can keep a pulse on your business and identify changes in income by keeping an eye on your bank statements.

Loss Prevention

There is a high risk of loss that goes undetected when bank statements are not checked and reconciled. It’s possible that money that has been taken for some time may go unnoticed because not all employees or accounting firms are trustworthy. This is how some workers are eventually able to embezzle thousands or even millions of dollars. You can avoid losses by reconciling your bank statement, which may also reveal a potential issue with your accounting system.

Monitoring Fees and Interest

You can monitor any charges, interest payments, or penalties that your bank might tack on to your account by using bank account reconciliation. Following that, you can make the necessary adjustments to your company’s books.

Accuracy in Balance Sheet

Knowing the cash amount listed on your balance sheet is accurate is crucial for you as a business owner. This is done to make sure that additions and deductions on the bank statement match those in the company’s accounting records.

Conclusion

The blog emphasizes the significance of why you should reconcile your bank accounts. You might not have enough time as a business owner to complete a bank account reconciliation. So, you can ask an expert for assistance. Professional bookkeepers can help keep your company’s books accurate and up to date. Additionally, you can get bookkeeping services for your company from CAnest so that you can concentrate on business expansion.