Bank reconciliations occur when a person needs to compare all financial records from sales to expenditures against the bank's documents. This system enables people to authenticate their business accounting numbers and ensure that all the numbers are aligned. So here is how to get it done:
Get all your bank records
First, you will need a list of all the transactions from your bank, and you can get this detail from your online banking platform.
Retrieve your business records
Next, get your business records which might be your spreadsheet, logbook, or even accounting software.
Get started
Start from the final balance on the business records; this is an excellent place to kick start the reconciliation.
Go through the bank deposits.
You must check the bank deposits to ensure that they are tagged as income. If they are not classified, you might want to check if it was a refund, sale, or something else.
Check all income in your books.
Every entry should correspond with a deposit in your bank statement. Again, if something is missing, try to figure out why; it could be that a customer's payment bounced.
Go through bank withdrawals.
Analyze your bank withdrawals as it is recorded in your records. These are things such as bank fees which you probably didn't account for at that time.
Work through the expenses in your records.
Every entry in your statement should match a withdrawal and if there are no matches, figure out why it is that way. It may be that one of your payments didn't clear just yet, or you paid for an item with cash.
Get to the end balance.
After checking the deposits and withdrawals and your bank balance, match the total figures you got in your business account as it will become the beginning point for your subsequent bank reconciliation.
The process of bank reconciliation can also be done easily; it doesn't have to be tiring. Yes, moving from one financial document to another is not what everyone likes, and if you cannot get the spare time to do it, there is an alternative method.
You can work with software that makes the bank reconciliation process more accessible. Most of the banks in your area can send the details of the transaction to the financial software. The transfer will be done through a secure link, so don't worry about your details getting to the wrong hands. When you are set to do the bank reconciliation, the software of choice will match the bank transaction and offer the following:
A suggestion on matches that correspond with other entries in your bank account.
The software can ask you what the transaction is for and then enters the details into your account.
Regardless of how you go about bank reconciliation, you will still experience some issues occasionally. There will be times when it feels like n amount appears in one record but doesn't reflect on another form, and if this happens, please don't panic. The issues are precisely why you are engaging in bank reconciliation, and there are some explanations for the problems.
Your business records may show figures not in your ban statement because you got an income that you didn't deposit in the bank. It is also possible that you paid for an item from a different account. The bank statement can also show something that isn't in your business records, which you forgot to input.
As you unravel these issues, remember to solve them so you can have an adequately reconciled account with every detail in place. It is also essential that you do bank reconciliation often, as the more you do it, the easier it becomes. You can start by scheduling the bank reconciliation at least once every week: set up the system and make it easier to match all your records.
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