The Importance of Reconciling Your Bank and Credit Card Accounts
You might wonder - Do I really need to reconcile my bank and credit card accounts?
Yes, reconciling your financial accounts can help you identify bank errors, entry errors, bounced checks, uncashed checks, unrecorded deposits, and much more. Regularly monitoring your financial accounts can help you identify issues before they become a problem.
Comparing your financial records against your bank and credit card statements can also help you detect any potential fraud. Look for deposits that did not make it into the bank account, any unauthorized transactions, and any missing or altered checks?.
Reconciliations can identify administrative issues that you may want to address. Are your deposits taking too long to get to the bank? Are you aware of any customer’s payments that have bounced? Are all of your transactions being recorded in your accounting system? How much cash is actually available?
How frequently should I reconcile my accounts?
The frequency of your reconciliation should be based on the volume of your transactions…and your time constraints. Generally, you should reconcile your accounts each month when you receive the statements from your financial institutions. If you have a lot of transactions, you may want to consider doing the reconciliation more frequently. If you decide to do them less frequently I would suggest that you closely monitor your accounts, so you don’t miss any potential errors, and you have only a few transactions per month. As mentioned, one of the key benefits to reconciliation is to identify errors, so you should not put this off for long.
Year-end is approaching, so make sure to get all of your accounts reconciled early January to verify all your transactions are properly recorded for your tax return.
Ok, but what if I am just too busy to do the reconciliations?
Most accounting software can connect with your bank and credit card accounts to simplify the process. If you use QuickBooks you can link your financial accounts to auto-import the transactions, then all you have to do is quickly review and add them. If you still don’t have enough time to complete your reconciliations, let our RAD team help you. We can ease your bookkeeping burden by assisting with your reconciliations, bill pay, payroll journal entries, quarterly payroll reconciliations, and we can also provide QuickBooks support. We are here to help if you need us.
Written by Lori Pavich, Bookkeeper, RAD