Bank reconciliation is a process of comparing company’s record of transactions with bank’s record of transactions. Doing a bank reconciliation every month enables you to be aware of what is happening with your accounts and what is the current status of your account. For this purpose, bank reconciliation statement should be written at the end of every month. Bank reconciliation statement settles bank’s records with your company’s general ledger. To get a fair idea about bank reconciliation, Bank Reconciliation Template will serve you right. Having a look on its format will give you an idea how you can prepare a bank reconciliation statement for your organization.
To avoid errors or to keep check on errors, reconciliation must be completed on monthly basis. Bank reconciliation statements are integral part of success of any business to keep business on track.
Basic rationale of this statement is to balance the bank reconciliation statement. It takes balance on bank statement by taking away any outstanding checks. Outstanding checks are those checks that have not been cleared but have been mentioned in bank statement.
Banks reconciliation statements offer checks and balances for accounting of both, your company and bank. If you see any disturbance in your company’s accounts like if someone is stealing money from your company’s account, bank reconciliation will catch it easily. Bank reconciliation should be reconciled by a person other than who is handling payables and never writing checks.
Bank reconciliation provides you with complete detail about unclear checks or deposits that are not recorded. This will be a great cause of problems with the delivery of these payments or deposits. In such case when an item is outstanding for more than one month, your accountability is to contact payee to check mailing address or bank account numbers.
Errors that are normally found in these statements are made by the banks. You might have noticed that checks from someone else’s account are by mistake written in your account. To combat with such issues, bank reconciliation statements provide detailed transaction history. This statement helps you finding out such errors and to ask bank to correct them.
Bank reconciliation statement also contains all bank fees that were charged to your account. You are required to add this fee to your general ledger in order to settle the statement.
Having a bank reconciliation statement serves your business a lot. Without bank reconciliation you expose yourself to risks. If someone is there who is stealing from your accounts and if you are not doing reconciliation, it will bring a time when you will not be able to keep your company with you. In such situation, that time is near to arrive when you will have nothing in your pocket to run your business or to survive in business world.