Bookkeeping in Victoria BC
Bank and Credit Card Reconciliation
Between bank and credit card accounts, it’s often difficult to keep track of a company’s money flow. As a business grows and its sales volume increases, records management becomes more challenging. Failing to stay on top of accounting can lead to financial loss and poor decision making.
Bank and credit card reconciliation is an essential process that should be performed after every statement is received, on a consistent monthly basis.
No Account is too Small to Monitor
Accounting records and bank statements don’t always align. The end goal of bank reconciliation is to determine the differences between the two. Making this a monthly process will ensure that cash records are correct, and it can avoid costly and embarrassing instances of overdraft fees or bounced checks.
Account reconciliation can also be used to identify patterns of internal fraud. By staying on top of this essential form of accounting, it’s possible to create more robust controls of cash receipts and payments.
There’s no account too small to monitor. In fact, reconciliation could inform a business when it’s time to close or consolidate accounts. If an account is only moderately active, it could be generating significant ongoing fees. These could be avoided altogether by moving residual funds to a more active account.
At the very minimum, bank reconciliation should be performed each month, but with the right software and a dedicated bookkeeper, it could be performed daily. This will allow up-to-date record keeping and greatly reduce the risk of fraud or bad practices that lead to financial loss.
Several items can contribute to inconsistencies:
- Pending transactions.
- Over or underpayment.
- Duplicate transactions.
- Uncleared checks.
- Unaccounted service fees.
Reconciliation considers all the variables to balance the bank account and the company’s internal cash balance.
Credit Card Reconciliation for Small Businesses
Most consumers and small businesses prefer card-based transactions. Credit card transaction records often surpass the processing ability of a business’s software solution.
Because card-based transactions are electronic, they’re relatively easy to reconcile when the right software and accounting support team are available. Automation can import data from internal systems and compare it to digital card statements and ledger systems. The transactions are compared both on the card provider’s side and the company’s internal records. Discrepancies can then be investigated and reconciled.
A small business accounting firm eliminates the time and hassle of manually matching transactions. Most entrepreneurs and small business owners don’t have the experience for credit card reconciliation.
With accurate bookkeeping, it’s possible to eliminate instances of fraud, under or overutilization of credit, or credit line exhaustion. The data collected is also essential for audits and tax filing.
Better Business Decisions
No matter the size, every business can benefit from bank and credit card reconciliation. The process ensures that:
- Funds coming into and out of the business are traced.
- Internal accounting software matches bank and credit card statements.
- Data is analyzed for fraud patterns.
- Underutilized accounts can be closed or consolidated to minimize fees.
Most importantly, up to date and accurate data allows for better decision making. Money can be invested or allocated based on clear records. Accounts receivable can be quickly followed up on, vastly streamlining the cash flow of any company.
Schedule your free consultation to determine the correct bookkeeping plan for your business needs