What is a bank reconciliation and how to do it in your business?

What is a bank reconciliation and how to do it in your business?

Every month, your business must face collections and payments. The more bills your business generates, the bigger will be the number of registries to be reconciled. Usually, the values registered in your GL may not match with the ones from bank statements. Here is where bank reconciliation turns into an essential part of the process.

What do bank reconciliation processes consist of? Why are they important for your business? In this article we will show you why you should not stop doing this process. And the most important thing: which is the best and most productive way to do it, so that your record keeping is up to date, without making mistakes and wasting time.

What is a bank reconciliation all about?

The bank reconciliation is the process designed to compare data from bank statements against your general ledger.

On one side, the bank registers all transactions and transfers made or received from your bank account. On the other hand, the business registers issued and incoming invoices from every period.

Data from your bookkeeping may not always be enough to make many processes in your company. For example:

  • Collections and Payments´ Management
  • Treasury Control
  • Monitoring of Defaults
  • Invoice errors oversight
  • Avoid managerial errors

Hence, your Accounting Area has no other way to solve these issues except embarking itself in the bank reconciliation process.

The latter consists of comparing bank data with general ledger data and see which registries match and which do not. There may be clients who have not payed yet. Maybe, they payed less than what was owed, or more than what corresponded. Or it may also happen that you have not payed pending invoices, or that you payed a different amount compared to what you actually had to.

Another common issue is that there may be payments that have not been recorded or registered, as well as duplicated collections. Perhaps dates from invoices do not match with the amounts´ transfers.

All the scenarios previously mentioned must be supervised efficiently, so that decision making is less tedious and more accurate. The risks of not doing it are considerably high.

How to approach a bank reconciliation process?

Bank reconciliations must be managed regularly and in a standardized way. When many bills and invoices are charged, doing this process manually is very complex and unproductive.

You must compare data between to Excel tables, see which match and which do not, and do this process frequently. If you have thousands of data files, committing mistakes and err is easy if the bank reconciliation process is done manually.

  • Optimize time of your employees and manage the bank reconciliation process done automatically.
  • Avoid Accounting Management errors and allow your business to keep bookkeeping up to date.

You never know when you have to (and can) face a tax inspection procedure. The worst that can happen is that you find out there is not one reconciliation made between your bank statements and GL.

With Conciliac´s solution, you can manage bank reconciliation processes to compare data and do all this work in an automated way. It does not matter if there are hundreds or thousand of extracts. You will be able to do these reconciliations in an easier and agile process.

Let us know your needs to be covered through our website or click in the Demo button, on the right hand side of the screen to discover the benefits of Conciliac in a bank reconciliation process.