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Why Reconciling Your Account Is Vital To Your Month End Close Process

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Check Your Bank, Check Your Books

Reconciling your bank account is a fundamental month end closing process in accounting and is critical for your business and personal financial health.

If you are not reconciling your bank accounts on a regular basis you can’t be confident that what your balances show in your books is really what is in your bank.

At a minimum you should reconcile the bank statement to your records whenever you receive your bank statement, be it monthly or quarterly. Even better, reconcile it every day!

Reconciling your bank account means taking the balance from your bank statement and comparing it to the balance in your books.

If they are the same, you’re done. But more than likely they are different, and you need to know why.

Checks you have written that haven’t cleared the bank, deposits you posted to the books but haven’t made it to the bank yet, and bank fees are the most common reconciling items.

Protect Yourself from Fraud

Check fraud is still a serious fraud issue in the United States. According to the Association for Financial Professionals 74% of organizations were victims of payment fraud in 2016.

Checks continue to be the payment method most often exposed to fraud activity.

When you reconcile your accounts make sure you check for forged signatures or counterfeit checks.

Without the reconciliation a fraudster could be siphoning your funds right under your nose.

Need Help?

If you haven’t reconciled your bank accounts in a while or you need someone to take care of that for you, Luxa can help. Either as a special project or part of a regular bookkeeping engagement we are your outsourcing resource.

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Topics: Accounting procedures Best practices Accounting