Credit card and bank reconciliations are important for good bookkeeping records. If you don’t have these reconciliations done regularly, your decisions will be based on inaccurate information, and that can lead to cash flow issues in your business.
A bank reconciliation consists of matching your accounting information with that on your bank statements. This process ensures your books are accurate.
The Advantages of Bank Reconciliation Statements
It’s common to find mistakes in financial accounts. Sometimes this is due to fraud but usually it’s just a matter or making a mistake. Still, these errors can be costly. Catching them is a major advantage of bank reconciliations.
Other advantages include:
- Identifying inefficiencies in the business
- Ensuring statements and payments aren’t misplaced
- Ensuring your finances are safe
- Developing processes to prevent frequently made mistakes
- Knowing your tax reporting is correct
More Benefits of Bank Account Reconciliations
Comparing transactions can also help you get a handle on bank fees. If, for example, your bank charges you if you have an overdraft or don’t maintain a certain balance, this will show up when you do the reconciliation. You’ll be able to see what’s going on and take steps to ensure you’re not charged the fee in the future.
Ultimately, your bank reconciliation statement will help you ensure transactions are recorded properly, catch fraud early (it’s rare but it happens), and prevent bank errors and unnecessary fees.
21st Century Bank Reconciliation
Thanks to cloud accounting, bank reconciliation is easier than ever. Your transactions automatically go into your accounting system and are recorded. The software can efficiently assist in reconciliation and, in the process, errors and inefficiencies can be quickly identified. With this information at your fingertips, you’ll be able to make strong decisions for your business based on accurate financial data.
Credit Card Reconciliations
Everyone makes mistakes (and so does intelligent automated software), but it’s important to catch them before they become costly or you make a decision based on inaccurate financial data.
Credit card reconciliations involve comparing your records with your monthly credit card statements to catch mistakes or erroneous charges. They are useful for:
- Discovering fake charges, unauthorized purchases, and incorrect posting amounts
- Keeping a record of your business’s liabilities
- Recording purchases
- Minimizing interest and late fees
- Preparing an accurate general ledger
If other people in your business have company credit cards, make sure they provide their expenses to you. We like to use cloud-based software to make this easy for you and your team. All people need to do is take a photo of their receipt and our systems, integrations, and internal processes take it from there.
After your credit card is reconciled, you can rest assured that the appropriate information is accurately reflected in your financial data. With this information, you can feel confident in making decisions that will improve your business—and give you peace of mind.