Thinking about it, we made this post about bank reconciliation to add even more to your company's financial control .
What is bank reconciliation?
Bank reconciliation is the process of verifying the bank statement together with information from the company's internal financial control.
Through bank reconciliation, it is compared whether the bank's movements are in accordance with the movements registered in the company.
The importance of doing bank reconciliation
The main purpose of conciliation, and what makes it extremely important, is that it verifies whether the planned movements have occurred and whether they are in accordance with the company's internal records.
Through it, the entrepreneur is aware of whether all expected receipts have occurred.
And also if all the expenses contained in the internal financial control are consistent with the bank statement, being able to verify if there were expenses that were not registered in the company.
Let's see some of the important information obtained through bank reconciliation:
1- Bank balance
It is essential to know the exact amount in the bank account. This information is essential to make the cash flow , and also to avoid spending money that could not be spent.
2- Defaults
In the case of sales by bank slip or bank deposit, it is essential to check the statement and verify that the bill has been paid.
3 – bank fees
If the bank charges different rates than agreed, and bank reconciliation is not done, you will hardly be aware of it and will continue to be charged unduly.
4- loan rates
Similar to what can happen with bank fees, when taking out a loan it is important to keep an eye on the fees charged by the bank.
Because if higher fees are charged than the contracted fee and you do not follow up, you will continue to be unduly charged and the amounts may have an impact on your business finances.
The importance of doing bank reconciliation is simple: It contributes to accurate control of the company's finances. Since making an efficient financial control is a basic requirement for a business to be sustainable.
This process is even more essential in companies that make sales by credit/debit card, bank slip and bank deposit.
How to do bank reconciliation
If bank reconciliation is not yet part of your company's routine, surely after learning how important it is for your business, you will adopt this practice.
Do not know where to start? Check it step by step:
1- Record all financial movements of the company
This first step is (or should be) an existing practice in your company, which is the recording of all financial transactions. If this is not already a habit in your company, you urgently need to review your financial control!
Financial transactions involve all the money that comes in and goes out of the business, including employee salaries, expenses, sales, etc.
And if your company uses more than one bank account, the records must be made specifying the account in which the transaction will take place.
We emphasize the importance of records being made daily or whenever there is an entry or exit.
2- Check the balance
From this step forward, the reconciliation is effectively made. The frequency that it will be done must be defined according to the volume of movements in the company, which can be daily, weekly or even monthly.
The first information to be checked is whether the bank's initial and final balances are compatible with the internal control balances.
3- Compare the extract movements with the internal control records
Here all the details of the movements must be observed. Check if what was predicted happened; If there is any entry or exit in the extract, which does not contain in the internal control; If the dates and values are compatible.
4- Investigate and correct discrepancies
If the company's records are not compatible with the bank statement, it is necessary to determine whether the failure is in the internal control or in the bank.
From there, the records must be corrected, or the bank must be contacted – in case the error starts there.
Performing bank reconciliation quickly and easily
There are some ways to do bank reconciliation: Writing everything down with paper and pen and printing the bank statement to make the conference; Registering everything in a spreadsheet to check each movement, one by one.
However, these possibilities take a lot of time. But there is a simpler, faster and safer option to do this process, which is using financial management software .