

Bank reconciliation is the comparison of your monthly bank statement to your internal accounting records. You need to make sure that the closing amount on your bank statement matches the closing balance on your accounting records. Don’t be immediately alarmed if you discover a discrepancy as it could be a simple oversight, unaccounted for bank service fees, or outstanding checks. Whatever the reason may be, you need to identify and properly resolve the issue.
It may seem like common sense, but small business owners get busy and may forget to maintain accurate accounting records. Before you begin attempting your bank reconciliation, make sure your records are accurate. Double-check to make sure that you entered all outgoing checks and noted any bills you may have recently paid.
If you’re still receiving your bank statements by mail, don’t toss them in a drawer. If you can access your statements online, set a dedicated date each month to perform your bank reconciliation. As a small business owner, you should be reviewing your monthly banking statements each month to ensure that funds being withdrawn and deposited into your account are accurate to prevent bank errors and detect potentially fraudulent activity.
A cleared transaction means that your bank has processed the payment, and it should be reflected on your banking statement. Most discrepancies are a result of pending transactions. If you notice an error, double-check the following:
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