The most successful businesses have an iron grip on finances with a clear picture of how money moves in and out of the company. Failure to do so can result in embarrassing bounced checks, expensive overdraft fees, and even undetected fraud. And one of the most powerful processes you can use to accurately manage and control business accounting practices is bank reconciliation.
In the simplest sense, bank reconciliation explains the process of comparing your records to the corresponding information on your bank statement. No matter your business structure, proper management of funds in and out of the company is key to your growth and stability. At MB Group, we offer a tailored bank account reconciliation service to help business owners gain better control on cash flows. Continue reading to learn more about reconciling your bank account and how MB Group can help you save time and money.
Bank reconciliation is a strategic accounting process used to compare your records to those of the bank. The goal is to spot discrepancies and help determine whether changes are required. If discrepancies are noticed, the experts at MB Group can further investigate to determine if there is actually money missing from your business.
At a very minimum, reconciliations should be conducted once a month when bank statements are sent. However, the most successful businesses perform it daily based on month-to-date information accessed through the bank’s website.
When you reconcile your accounts daily, you’ll be able to quickly detect and correct problems. Particularly, the daily reconciliation of your bank account will allow you to spot fraudulent withdrawals or fraudulent ACH debits. Most importantly, it empowers you to deliver a timely response to limit exposure.
As a business owner, you are well aware of the importance of your financials. Reconciling your accounts is a way to ensure financial hygiene and credibility. Here are a few of the top reasons why businesses should invest in this strategic process.
As we previously mentioned, bank reconciliation can empower you to detect fraud from an array of sources. For example, if you pay a vendor by check, and they fraudulently change the amount, you would know in a timely manner through reconciliation. At the same time, if you share a joint account with a partner, you can detect if they’re withdrawing more than what’s recorded in the books. Although this process will not prevent fraud, it can empower you to know, initiate a timely response, and limit exposure.
In addition to providing timely fraud detection, account reconciliation can also serve as a deterrent. If your employees are aware that your business’ bank statements are reconciled, they will be less likely to attempt fraud against the business.
Your cash flows are everything to your business. Reconciling bank statements enables you to know and understand the relationship between money entering your business and bank account. It will also offer insight into the manner you collect and spend money.
While it’s not often, banks do make errors. And when you have regular bank reconciliations, you’ll be in a better position to ask the right questions and spot potential errors.
Looking at your books can be misleading, particularly if the information is out of date. For example, if your books and bank account don’t align, you could be spending funds you don’t actually have. On the other hand, you could be housing funds in an operating account that could be invested in other areas of the business.
Businesses who reconcile their bank statements regularly are able to ensure their accounts receivables never get out of control. And in the event there are consistent discrepancies between accounts, you’ll know a deeper issue is at hand.
As a business owner, you are expected to juggle several moving parts simultaneously. You must make sales, fulfill orders, send invoices, collect payment, and continually nurture relationships — all while ensuring your books are in order. And when it comes to the latter, there are simply too many functions and attributes.
Fortunately, you don’t have to do it alone! At MB Group, we’re a team of experienced accountants who can help you best manage business accounting, including bank account reconciliation.
Contact MB Group today to learn how we can help you create more efficiencies.