Everything you need to know about Account Reconciliation

When it comes to maintaining a proper accounting of the business, account reconciliation is very important. Account reconciliation involves proper documenting of the account balance for the business. The account reconciliation helps to confirm that amount spend in the business is the same as the recorded sum that makes the balancing of the two accounts similar during the reporting period properly. Regular account reconciliation will help to ensure correctness in the bank and reduction of fraud transactions. A business can maintain proper financial health by keeping proper account reconciliation.

How does the Account reconciliation process work?

The account reconciliation mainly involves capturing the different transactions that are entered into the accounting system. Here are some important steps in Account Reconciliation:

1. Comparing the bank statement with the account register

Check all the payments made in the bank statement with the entry in the accounts register. Note down all the bank statement transactions for no evidence in the payment receipt.

2. Check internal records

Proper checking of the bank statement balance must be done. Proper checking of all auto-payments from a bank account, uncleared cheques, ATM service charges, overdrafts, and other bank charges is done. These must coincide with the accounts books.

3. All cash inflow records to maintain properly in the bank account

If there is some money deposit shown in the bank and not reflected in the accounting book then make the entries soon in the proper book. If the account interest-bearing and the reconciliation is done before the date of the statement then corresponding interest must be added.

4. Bank error checking

Hardly there is an error in the bank statement, still, a proper checking is necessary with the account book. In case of any problem, the bank must be reported immediately to make the necessary correction.

5. Cross-checking the balance

A final check of the accounting records with the bank statement must be made. All the differences must be recorded properly between the two accounts books.

What are the benefits of proper Account Reconciliation?

1. Identifying the issues in misstatements

If there is some problem in the accounting or bank statement, the business does not understand where the problem is. Account Reconciliation will help to identify the misstatements in a proper way. Common errors like duplicate entries can also be detected and rectified.

2. Analysing fraudulent activities

If there are any fraudulent activities in the business they can be detected with account reconciliation. No external or internal fraudulent activity can go undetected here.

3. Keeping track of outstanding cheques

It becomes sometimes difficult for the business to clear the outstanding cheques in the business. This creates a problem for the business as well as the payees. Account Reconciliation can easily track all the outstanding cheques in the business and take the necessary steps.

4. Increases the efficiency in the account management

The errors in the accounting activities cause more problems in the accounting management of the business. However, a proper Account Reconciliation can help to increase the efficiency of the account management of the business. These are some of the benefits of the Accounts Reconciliation for the business. Outsourcing the Account Reconciliation to an expert agency can be very beneficial. Meru Accounting provides Account Reconciliation services for the business. Meru Accounting is a renowned accounting service provider agency across the world.