Bank Reconciliations

Each month a business needs to go through the process of performing a bank reconciliation. A bank reconciliation is a process to ensure that all of the transactions that were applied to a company’s cash account are correct and that all the transactions that are on the monthly bank statement are correct. A reconciliation needs to take place between the two, the cash account on the business books and the bank statement itself. Below are some tips to help you understand bank reconciliations. 

  1. The deposits and payments should automatically clear and be correct as they should have been processed during the month. 

  2. Those that would be missing are deposits in transit and checks that have not cleared the bank account. 

  3. The types of transactions that would probably need to be entered from a bank statement are bank fees and interest income/expense.

  4. This type of reconciliation process assures that those transactions that have cleared the bank are correctly processed in the accounting platform.

  5. This type of reconciliation assists greatly in tracking of cash flows.

  6. This type of reconciliation assists in the protection of the cash account against any fraudulent activities.

  7. An accounting platform will be instrumental in processing bank reconciliations with ease and precision as it will have its own bank reconciliation function. 

  8. This reconciliation can also be done in Excel if the platform does not have a reconciliation feature.