Finances feed the organization. No matter your industry or size to operate, grow, and successfully serve customers, you need precisely documented cash flow. Bank reconciliation is one of the most important components of accounting. But why? And more importantly, how can bank reconciliation software strengthen the process? Let’s delve into this and more when we review how a bank reconciliation should be prepared.
What is the Purpose of Bank Reconciliation?
To review, bank reconciliation is the process of validating your transaction history with that of your bank. The goal is to see if there are any inconsistencies present between your balance and the bank’s balance. Bank reconciliation accounting focuses on identifying these discrepancies. Then, adjustments are made to correct the status of the transactions. This does several things for the business.
Why is Bank Reconciliation Accounting Essential?
Bank reconciliation gives you a clear picture of where your money stands. This includes what cash is available for your use and the status of company payments. Additionally, it can also reveal underlying mistakes and illegal activities. Here are the three main benefits of reliable bank reconciliation:
- Confirms your current balance
The reconciliation helps companies avoid overdraft fees, missed payments, or even bounced checks.
- Reveals accounting errors
Bank reconciliations help pinpoint documentation-related mistakes or human errors that could compromise the company’s reporting. This helps avoid potential legal problems and logistical issues.
- Prevents fraud and theft
Bank reconciliations verify that financial amounts align with the transaction history of the company. Abnormalities can indicate suspicious activity that companies can act upon before losing thousands of dollars.
How A Bank Reconciliation Should Be Prepared
Some think that a bank reconciliation should be prepared daily. Others say it should be done at least monthly. Regardless of the rate you perform the reconciliation, the process is generally standard. Here are the steps.
- Begin by examining the bank’s ending cash balance.
- Next, add the deposits currently in transit from your company to the bank.
- Then, subtract checks or money that haven’t cleared the bank yet.
- You’ll also need to subtract or add other transactions that have occurred.
- After this, you look at the company’s ending cash balance by subtracting any bank fees, interest earned, and/or penalties.
- Once you have the balances of your bank and company, compare the two. They should be equal, otherwise, there is an accounting discrepancy that should be looked into.
Bank reconciliation accounting is a lot more in-depth than this sounds though. It can be tedious, even difficult to check all these records and calculations, and even still, nobody’s perfect. That being said, modern accounting software makes the process much easier.
Key Features of Accounting Seed Bank Reconciliation Software
Although it’s important, no one wants to spend days manually performing a bank reconciliation. Modern technology offers to create and review a bank reconciliation statement. While not all software is equal, Accounting Seed specializes in delivering a fast and effective reconciliation. Here are the features and benefits that will make your Bank Reconciliation more accurate and efficient.
Automated Matching Transactions
Introducing automation into your reconciliation process will eliminate hours of unnecessary work and help the process be free of human error. Our system enables easy bank imports with the automated matching of ledger transactions to bank feeds. Instead of looking up all the transactions one by one, you can click a button and view the data ready in your interface.
Audit trail lets you track changes throughout the reconciliation process to maintain accurate, up-to-date information. Accounting Seed provides drill-down options to look up specific dates and information to help you pinpoint and avoid errors. This also provides a record of your transactions from start to finish to ensure no tampering.l
Bank Direct Connect
Accounting Seed’s Bank Direct Connect functionality connects you to more than 14,500 banks and credit card companies for fast batch import/match transactions. This unique interface lets you clear bank transactions and facilitate quick reconciliations through minimal data entry. Spot exceptions, manage bank errors, monitor for fraud, and maintain accurate cash balances at all times.
Real-Time Visibility for Faster Bank Reconciliations
See any payments or transactions across checking, savings, and credit card accounts in a single view. Get a complete, real-time picture of all company funds and cash flows without having to hunt them down. And forget about having to use multiple tabs. Import statements from any bank and reconcile your checking, savings, and credit card accounts with a button click.
What You Can Expect with Accounting Seed Bank Reconciliations
These features, along with our platform’s flexibility, mold to your accounting lifecycle for a truly streamlined reconciliation. Here are some benefits our customers already experience.
- Enhanced visibility of entire banking breakdown
- Easily attach supporting documents to bank reconciliations
- Easily run bank reconciliation reports
- Link bank or credit card accounts easily
Our software has bank reconciliations covered! Sign up for your free demo to see how Accounting Seed will help you master bank reconciliations more than ever!