Reconciling Bank Accounts
A staple of monthly accounting activities for most companies (and many home money managers) are bank and credit card reconciliations. It is not uncommon, however, to hear “why bother?” Well, the truth is that “what you don’t know CAN hurt you” and, all too often, it does. But, reconciliation is such a simple way to safeguard your money and your financial reputation, why not do it regularly?
2. To discover entries that need to be explored and corrected … like bank errors, transactions you may have overlooked, or even fraud
3. And, finally, to see exactly where your money is coming from and going to. It’s important to step back and see your cash flow for each month to confirm it is in line with your expectations.
The process is relatively easy whether you use a checkbook register, Excel worksheet, or personal banking software. Begin with the bank statement and your register side by side. Check off each bank statement item that is also on your records. When you find items that are not on your transaction list, you must determine what needs to be corrected. Sometimes you may need to contact the bank for an explanation or correction but, more often, it is something you have overlooked in posting activity. Frequent entries you may not see until your statement arrives include monthly service fees, interest earned, ATM transactions, and any automatic payments.