7 Tips For Efficient Bank Reconciliation

Tuesday, 7 Jun 2022

Bank reconciliation is a vital part of bookkeeping that allows comparing the balance sheet of the business with its bank statement. It is required to ensure that the records in the books are accurate and there are no errors in calculations and the final balance amount.

It is also helpful in identifying fraud or discrepancies. Thus, expert bookkeeper Melbourne conduct the reconciliation process every month or quarter to maintain error-free records and ensure that all transactions are documented.

A lot of professionals use advanced tools to complete the process regularly. However, if your company is still relying on manual methods, you need to keep a few tips in mind to make the process efficient and productive. Let us look at these suggestions for completing bank reconciliation effortlessly.

1. Arrange All the Paperwork

The bookkeeper must organise all the records of business transactions and download the bank statements from the website. Before going ahead with the comparison between the ledger and the bank statements, they need to make sure that the business has recorded every transaction.

If they identify some discrepancies, they need to check the reason. Usually, a difference in the figures arises when the cheques issued by the business do not get debited. On other occasions, the business owner in Melbourne may have issued a post-dated cheque and that amount would be still visible in the business bank account.

In addition, the bookkeeper must have added the interest and bank charges to the expenses in the books. If the balance on the two sheets does not match, the bookkeeper must make changes and correct the errors to make it equal.

2. Check the Available Cash

Besides checking the amount on paper, it is important to check the amount available with the Melbourne-based business. Bookkeepers should look into the cash register and compare all three figures to ensure that all amounts match each other.

Thus, there is no risk of deficits because you know the actual bank balance and the figures on paper. To start the process of resolving errors, you must identify the record from which you witness a change in the calculations.

You must begin checking all the transactions after that point to identify the error. If anything is missing, you will have to add it to the books and compare the same with the amount in the bank account.

3. Go Month by Month   

If you reconcile bank accounts in Melbourne quarterly, you may have a big task at hand to cover every transaction in the past three months on the banking records. However, you can reduce the workload by starting from the current balance figures.

If it is not matching, go straight to the month before it and check the balance. If it matches, it means the discrepancy has occurred in the current month and you can start looking for it. It is an easier way to identify the records that are missed or misrepresented in the books. So, make sure you are cross-checking every figure carefully.

4. Avoid Common Bookkeeping Mistakes

Manual entries usually lead to errors as the bookkeeper may type the same amount twice under the accounts payable column or may forget to record a transaction in the books. When they are using spreadsheets, it is common to make typing mistakes because data entry is a taxing activity that consumes a lot of time and effort.

Even the mistake of an additional zero can lead to huge discrepancies and make the business owner overspend. It can lead to losses and strained relationships with customers and suppliers in Melbourne if they get affected by it.

Trained and expert bookkeepers are aware of these common mistakes and make every effort to avoid them. They double-check the entries or use accounting software to automate the process and reduce human errors.

5. Look for Errors in Bank Statements

At times, banks in Melbourne can also make mistakes. They should not be considered sacrosanct as they may have debited or credited a wrong amount. After all, the bank employees are also human.

In some cases, a customer may have made a mistake by using the wrong account number and that amount may have been debited from your business account. Thus, the bookkeeper must be vigilant and check all entries to ensure the mistake is corrected by the bank in time to avoid any financial problems and prevent small business frauds.

6. Update the Books During Reconciliation

It is the responsibility of the bookkeeping company to get things in order once they identify a mistake in the books. Only mentioning the same to the business owner or the bank in Melbourne is half the job done.

They need to make sure that the problem is resolved at the earliest and that the books are updated according to the correct entries. If there is a pending incoming amount, then they need to speak to the customers and follow up until they get paid.

Similarly, if an outgoing amount has not been paid, they must speak to the suppliers and get the cheque cleared to avoid penalties that can further add to the business expenses. The result should be perfect books in order and accurate bank statements with the required amount in the account.

7. Use Accounting Software

Technological advancements have made bookkeeping tasks much easier for the professionals in Melbourne. Most of the activities can be automated through the accounting software, such as recording daily transactions, invoicing, inventory management, and payroll management, and it also provides real-time data access to make informed decisions.

Thus, using the accounting tools is an excellent way to ensure that there are no errors and bank reconciliation can be completed in less time than expected. The tools allow the bookkeeper to get all the bank statements imported to reconcile the payments without any effort.

Conclusion

When you run a business, you need to find a reliable and experienced bookkeeper in Melbourne who can keep your books in order and avoid errors. Bank reconciliation is an essential part of error-free books, and it can be made efficient by following the tips mentioned above.  

 

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