Bank reconciliation is a time-consuming but necessary task that needs to be completed on a regular basis.
Creating a bank reconciliation statement on a monthly or quarterly basis will help a business understand its cashflow better, keep its accounts in good standing as well as combat fraud and highight errors early before they impact on a business financially!
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Jetbooks can help you with your bank reconciliation - completing all the paperwork and ensuring that your bank reconciliation statement is created regularly andaccurately. Click below to request a quote;
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Bank Reconciliation Statement
A bank reconciliation statement summarises a business’s financial activity by matching bank account transactions with the internal financial records to confirm that all the transactions in your bank accounts are recorded in your business accounting records – it’s what many people call ‘balancing the books.
The statement will show bank account activity such as withdrawals and deposits, along with any other transactions - depending on the way the business has been set up and whether there is related business entities bank reconciliation can become quite complicated.
The bank reconciliation process serves multiple purposes - such as ensuring any cash takings have been paid into the account, recording any banking fees charged, and is also useful in detecting and preventing any fraudulent activity.
Therefore, while bank reconciliation may be tedious and boring, it is an entirely necessary process to help spot errors and protect the business from overspending or even falling victim to fraudulent activity.
What's Required To Produce a Bank Reconciliation Statement
In order to create a bank reconciliation statement, it is necessary to have statements from both the current month and the previous month, as well as the closing balance of the account.
Generally, a cut-off point for processing transactions on the statement is at the close of business on the previous day, as it is likely that transactions will continue to be made on the day the statement is created.
Most organisations, irrespective of their size, scale, or sector spend huge amounts of time manually checking and matching transactions, preparing and posting journals to complete their bank reconciliations – not exactly what a business owner dreams about when setting up day one.
Bank Reconciliation Statement Process
Access to bank records – covering the period of reconciliation, so two most recent months statements at least.
Access to business records – internal financial records for the same periods of the bank statements
Review records - match the bank deposits and withdrawals with income and expenses activity from the business’s internal financial records.
Compare the end balances – after any adjustments the closing balances on the bank statements and the internal bookkeeping should match.
Business Benefits of Bank Reconciliation
- Ensures your business bank account is kept in good standing.
Completing a bank reconciliation statement provides you with the financial data you need to keep your bank account operating without any unwanted surprises.
Bank reconciliation shows you how much money you have in your account at any given time and what your cash flow looks like for the immediately forthcoming period.
Having this information ensures that you don't make withdrawals or payments that take you over your overdraft limit or hurt your credit score if they are rejected.
- Helps prevent fraud and error
Regular bank reconciliation can spot any irregularities in your banking data and draw attention to any suspicious-looking activity.
Fraud is an unfortunate fact of life but spotting it early can nip it in the bud and prevent a bad situation from getting out of control.
As it turns out most irregularities in financial records are down to human error rather than pre-meditated fraud and regular bank reconciliation can help identify errors and fix them before they impact a business’s financial standing.
- Provides up-to-date financial data
Bank reconciliation can inform other parts of your financial operation.
The bank reconciliation statement will show which cash and cheque transactions have been cleared and which remain outstanding.
Knowing which debits and credits have been cleared, which are in process, and which are yet to show can help you with the credit control process and also provide valuable insight into cash flow.
Automate Your Bank Reconciliation
So, we have established that whilst Bank reconciliation is important and shouldn’t be ignored, but is something that needs to be done on a regular basis and is therefore time-consuming, so the question is; can it be automated?
The short answer is – yes, kind of.
At Jetbooks we use Xero to massively reduce the time spent on bank reconciliation for our clients as it automatically and securely imports and uploads your bank transactions every business day.
The software works with all major Irish banks and is simple to set up. Find out if your bank connects with Xero
Xero also makes it easy to categorise your business spending. Was it the payment of an invoice? Was it spending on travel? Or stationery?
Xero makes accurate suggestions – all you have to do is press confirm.
You can even set up rules for matching your bank transactions automatically to invoices, bill payments, and purchases that are already recorded in Xero, making the reconciliation process seamless.
We love the Xero platform due to its usability and flexibility.
Especially as we tend to work on the move, often jumping between the laptop and mobile. The Xero app allows us to categorise our bank transactions on the move so we don’t waste a minute.
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Bank Reconciliation Service for Irish Businesses
Jetbooks gives you the confidence that your bank reconciliation statement will be created accurately every time!
Complete the form to request a complimentary bank reconciliation consultation.