The reconciliation of banks accounts is vital to the success of your business. It can be intimidating for some, but with established procedures and today’s software and electronic features, it can be quite manageable.
The first step involves the matching of paid items from your bank’s information reporting system or bank statement to the data from your company’s books. The purpose here is the make sure that all transactions posted to the company’s bank accounts are accurate. Reconciliation should be a three-way process comparing the data on the bank statement with the data posted in the general ledger and the source document.
It is recommended that you look at the items posted to your bank account each day by signing into your online banking service and reviewing activity from the prior day. While a complete reconciliation is done daily by some, the most important thing is to actually know what the bank posted to your account last night. A full reconciliation should be done at least monthly, at a minimum.
If you have multiple accounts – corporate card,/travel and entertainment, payroll, credit card , reconcile those at the same time. Be prompt in examining your bank statements and quickly notify the bank of fraud or errors. Failure to do this in a timely manner may result in liability being transferred back to you because of a lack of due diligence in protecting your accounts. Within 30 days is reasonable and after 90 days is near where the bank will draw the line.
If you write a lot of checks, see if your bank reconciliation module within your software will permit you to import a list of paid checks from the bank. This is not difficult and it will keep you from having to manually check off your cleared items. It can save time and prevent errors. Practically all banks should allow you to export this “paid item list” from their system into a csv file for import.
Your bank can also fully reconcile your bank accounts each month (for a fee), but this requires you to be able to send the bank information of the checks you have written. If you write more than 500 checks each month, this is worth looking into. The time you save by letting the bank handle this task may be worth the cost.