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Importance of Bank Statement and Credit Card Reconciliation

  • By Lauri Paxton
  • 24 Jul, 2013
Cash is King …or can also be the downfall of your company if improperly managed.  Small business owners are tasked with wearing many hats in the day to day operation of their business and often can’t find the time to reconcile these accounts.
By reconciling monthly statements and reviewing general ledger accounts, business owners are able to make sound financial decisions about the growth of their company and identify particular product lines that may be non-profitable.
In Quickbooks, the bank and credit card reconciliation feature is accessed by going to the “Banking” drop-down menu at the top of your screen and selecting the “Reconcile” option.  And, as with the bank register, your credit card accounts also have registers available where all charges and payments can be entered.
Monthly Bank Statement Reconciliations allow a business owner to:
  • Identify lost checks, deposits and unauthorized wire transactions.
  • Detect and prevent excess/unjustified bank charges and ensure transactions are posted correctly by your bank.
  • Detect and prevent embezzlement of funds from within your company.
  • Protect yourself. Timely reconciling and prompt objection to your bank regarding unauthorized, fraudulent or forged checks presented to your bank and paid by that bank, may allow you to relieve your business of responsibility for the shortfall and transfer the risk to the bank.
Credit cards and business lines of credit have become substitute bank accounts in small business, so reconciling your business credit cards and lines of credit is as important as reconciling your bank accounts.
Reconciling your credit card accounts allows business owners to:
  • Identify duplicate charges, unauthorized purchases, and incorrect posting amounts.
  • Determine your true liability even though transactions may not have posted yet.
  • Account for online purchases or purchases with missing receipts
  • Manage your credit more effectively and minimize interest charges and late fees.
Putting the pieces together with a General Ledger
The general ledger is the core of your company’s financial records. These records constitute the central “books” of your accounting system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your account balances.
By reviewing the details of your general ledger each month, you’ll be able to identify any discrepancies such as double billings or any unrecorded payments. Fixing the discrepancies as soon as possible ensures your books accurate.
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