How often should you reconcile bank accounts?

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To reconcile unusual transactions, you may need to check your prior records to see if any transactions on your statement are from payments you issued before the current reconciliation period. You may also need to check other accounting records – such as vendor invoices – to see if you simply forgot to enter a transaction in your bookkeeping software. In this case, you'll need to enter those transactions now to correct your internal records. (You can enter the transaction in the current month, rather than trying to recall when payment was actually issued.)

If, after reviewing your records, you can find no indication that you simply forgot to enter the transaction, you should contact your bank to get more details about the transaction, including copies of canceled checks or bank transfer details. You can use these details to try to confirm whether it was a payment you actually intended to send and just failed to note. If you still don't recognize the payee or the specific transaction, contact your bank's fraud department right away.

FYI: Some banks will reverse fraudulent transactions if they're caught early enough, which is why it's important to reconcile your accounts early and often.

6. Reconcile your checking account with other accounts (optional).
Not all companies use double-entry accounting, even though it's a common feature of accounting software. If you use this type of accounting for your business, when reconciling your bank account, you should use this as an opportunity to reconcile your other accounts as well.

This process is a bit more complicated, but once you reconcile all of your internal transaction records, it basically involves ensuring each individual transaction is broken down properly in your books. Each transaction should be reflected at least twice in your internal records – once in a cash account and once as a credit or debit to a liability or equity income.

Tip: By using dual-entry accounting and reconciling your transactions across all your accounts, you new zealand whatsapp number can see updated amounts of outstanding debts as well as the net value of your business at the end of each accounting period.

Most business owners reconcile their bank accounts at least monthly, which is the general recommendation. However, with modern accounting software, you can keep your bank accounts under constant surveillance and know at any given time exactly which transactions have cleared and which are outstanding.

The software can also send you instant notifications if a transaction clears in your account that you haven't entered in your records, so you can take immediate steps to resolve any accounting mistakes. With these capabilities, there's no reason not to make reconciliation a near-constant bookkeeping practice for your business. Use the monthly account reconciliation as a time to review your company's transactions for ways to save money or improve your operations.

What happens if bank reconciliation doesn't balance?
If, in the process of reconciling your business bank account, you find that the balance on your account statement doesn't match the balance in your records, it could be for any number of reasons. Most often, it's a result of bank fees that the bank doesn't notify you about until your statement comes, or it's an internal mistake – transactions that were not entered or were entered incorrectly. What you should do in response depends on the nature of the error and the risk to your business.

These are some of the most common factors that throw off a reconciliation and how to deal with them:

Uncashed checks: You may need to remind payees to cash your checks.