Why are reconciliations crucial to your business?

The thought of doing a bank, credit card or loan reconciliation strikes fear in the heart of many business owners. The reality is you shouldn’t be scared of reconciliations.

The process of completing your bank reconciliation is to “tick and flick” the transactions that appear on your bank statement against the transaction you have entered in your accounting system. When all transactions have been confirmed on both your bank statement and your accounting system you can pat yourself on the back as your bank reconciliation is complete!!

What purpose does a bank reconciliation fulfill? A completed bank reconciliation confirms that the transactions that appear on the bank statement have been entered into your accounting system. However, whilst the bank reconciliation confirms that all transactions have been entered  into your accounting system it does not confirm that the transactions have been posted to the correct accounts. To do this you should also perform a general ledger reconciliation, debtor reconciliation, creditor reconciliation and payroll reconciliation. But at this point it all become too much for business owners who don’t have dedicated accounting skills.

But, to be sure that you accounting reports provide a true and accurate representation of your business activity you should carry out each of these reconciliations every month.

For more on reconciliations our specialist Newcastle Bookkeepers have the skills to help you make the most out of your cash and ensure that your bookkeeping problems are solved quickly. For a complete list of bookkeeping services contact Shelley on 0412 481 559.

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