Bank Reconciliation Is A Lot More Than A Simple Task You Do At The End Of The Month.

Bank reconciliation is a lot more than a simple task you do at the end of the month.

It is a habit that helps small businesses, people who work for themselves and even bigger teams keep track of their money. When you do it every week it stops mistakes from adding up gives you a better idea of how much money is coming in and going out and helps you keep your finances in order. Here is why doing bank reconciliation every week is an idea that you can fit into your busy schedule.

 

What is bank reconciliation in terms?

Think of your business bank account like a record of all your money. Your books are like a list of every sale, payment and expense. Bank reconciliation is when you check these two records to make sure they match. You make sure that the transactions you wrote down in your books are the same as what the bank says.. You find any mistakes, like money that is missing or fees you did not know about or checks that have not been cashed yet.

 

Why is it better to do it every week of every month?

1) Small mistakes can become big problems

- If you wait a month you might find a lot of mistakes at the time and it can take a long time to fix them.

- If you find mistakes early you can fix them quickly. That means you will not have wrong numbers in your financial reports.

2) You can see how much money is coming in and going out

- When you do bank reconciliation every week you can see how money you have in real time. You will not be surprised if you do not have money in the bank.

- When you know how money you have you can plan better. You can decide what to buy how much to pay your employees and how much to save.

3) You can catch people who are trying to steal from you

- If you check your records every week you can see if someone is taking money from your business.

- You can also see if someone is paying you twice or if you are paying someone much money.

4) Doing bank reconciliation every week makes it easier

- When you do it every week it becomes a habit. You get faster and better at it.

- You do not have to worry about a lot of mistakes at the end of the month. You already fixed them every week.

5) You can make decisions when you have accurate numbers

- When your numbers are correct you can use them to make good decisions like how much to charge for your services or how to budget your money.

- It also helps when you are doing your taxes. If your numbers are correct you will not make mistakes. You will save time.

 

What does weekly bank reconciliation look like in life?

You can make a plan and stick to it. Here is a basic plan you can use for your business.

1) Choose a day and time every week

- Pick a day at the beginning of the week like Monday or Tuesday. Set aside 30-60 minutes. It is easier to do it at the time every week.

- If you work with someone who helps you with your books choose a time when you can talk to them about any problems.

2) Get all the papers you need

- Get your bank statement for the week.

- Get your books or the records from your accounting software.

3) Start with the things

- Begin with the money you deposited into your bank account. Make sure it is in your books and on your bank statement.

- Check for any bank fees or interest and make sure you wrote them down in your books.

4) Match every transaction

- For every transaction in your books make sure it is on your bank statement with the date and amount.

- Mark the ones that match and make a note of the ones that do not.

5) Find mistakes and fix them

- If you wrote a check but it has not been cashed yet make a note of it.

- If you deposited money. It is not on your bank statement yet make a note of it.

- If you see a bank fee or interest that you did not know about add it to your books.

- If you made a mistake like paying someone fix it in your books.

6) Fix your records

- Make changes to fix the mistakes. If you are not sure make a note. Come back to it later.

- Keep a list of all the changes you made so you can remember why you made them.

7) Look at transactions

- Check the transactions that are still pending like checks that have not been cashed yet.

- Decide if you need to call the person who wrote the check or the bank to fix the problem.

8) Finish the reconciliation

- When everything matches you are done.

- Save a copy of the reconciliation report so you can look at it later.

9) Look at what you learned

- See if there are any patterns, like fees you did not know about or late payments.

- Use what you learned to make your business better like changing how you get paid or setting up alerts for activity.

 

Tips for making weekly bank reconciliation

 

• Use accounting software that can automatically import your bank transactions.
• Keep all your papers, like bank statements and receipts in a special folder.
• If you have a team divide the tasks so one person does not do everything.
• If it is too much to do in one week break it up into tasks.
• Use a checklist so you do not forget anything.
• Keep the banks phone number in case you need to call them.

 

Common. How to solve them

- If you do not have time treat bank reconciliation like a meeting.

- If you are not sure if someone paid you make a procedure to check.

- If you have bank accounts reconcile each one separately but look at the big picture to see how much money you have overall.

 

The human side of bank reconciliation

 

Behind every transaction there is a real person, like a client who paid you or a vendor who sent you a bill. Weekly bank reconciliation helps you keep track of what's really going on. It reduces stress. Helps you make good decisions. It is not about being perfect it is about trusting your numbers.

 

If you are new to this start small. Do it for one week then two weeks. Gradually make it a habit. Remember the goal is to have numbers so you can trust them.

 

Example

A business, called BrightWave Consulting does bank reconciliation every Friday. One week they found a mistake: a client paid them $750. The bank statement only showed $450. They looked deeper. Found out that the client paid them in two separate payments but one of them was recorded incorrectly. They fixed the mistake. Now their books are accurate. A days later they found out that the bank charged them a $25 fee, which they had not recorded. They added the fee to their books. Now everything is correct.

 

Bottom line

Weekly bank reconciliation is not exciting. It is very useful. It helps you avoid mistakes keeps your finances in order and gives you a picture of your business. It is a habit that pays for itself by preventing small problems from becoming big ones. With a plan you can stay on top of your finances catch mistakes early and keep your business running smoothly.

Would you like a customized checklist, for bank reconciliation and a template you can use in your notebook or accounting software?