On the top of the list of bookkeeping tasks that SMB’s despise, the bank reconciliation is probably number one. Even trained bookkeepers can find it difficult at times. So, let’s take a look at this process and discuss why it needs to be done, how often it should be completed, why it can be difficult, and if there is an easier way to complete it.
What is a bank reconciliation?
A bank reconciliation is a critical process that should be completed at least one per month (most SMB’s perform the bank rec once per month) for each bank account that a business maintains. The reconciliation process matches your financial records with those in the bank statement. For any transactions that do not match, the business needs to locate the discrepancy and book it to an appropriate revenue or expense account. By performing the bank rec, the business ensures that they have an accurate recording of their cash position – something every business needs to know.
In a simple bank account, one with very few transactions and/or all the transactions on your books match the bank statement, the bank reconciliation is easy. However, if you have various sources of revenue, multiple transaction that are in float (a term used to describe transactions that have been booked in your financial system, but haven’t cleared the bank), then the process can get complicated quickly. This is the reason that owners and even experienced financial managers struggle with this process.
Can bank reconciliations be completed easier and faster?
So how can this process be made easier? The answer lies in new technology that is enabling users to access banking data on a daily basis and match it to the bank account in your financial system. These systems are “smart” and can learn using artificial intelligence to not only match transactions, but to learn how you book certain types of transactions. Because these systems can access the data daily, you can get a report that automatically matches transactions that the systems recognize and apply logic to new transactions. Because this happens daily, discrepancies are easier to catch, and at the end of the month, your bank account is reconciled.
Technology is your bank-rec friend!
Through the use of new technologies, tasks like bank reconciliations are simple and easy even for small business owners. We built Expex and Carly to perform bank reconciliations simply and easily.
Proper and timely bookkeeping and the performance of financial tasks are critical to maintaining and keeping a healthy business. Hire Carly and rest assured that your bank reconciliations are performed accurately and securely each and every month.