A bank reconciliation involves a comparison of your sales and expense records against the record your bank has. It is a critical financial process to identify and rectify any discrepancies or errors between your internal financial records with the transactions recorded on your bank statements.

Bank reconciliations keep your bookkeeping accurate and can help lower your tax, alert you to fraud and allow you to track costs. They are essential for several reasons:

• Firstly, they help detect and prevent fraudulent activities or errors such as authorised transactions or bank fees.
• Secondly, they provide a clear picture of your actual cash position, allowing for better cash flow management and informed financial decision-making.
• Thirdly, by reconciling regularly, you can also identify any outstanding checks or deposits that haven’t cleared, ensuring that you have an up to date understanding of your financial health.

It can take a lot of time to do it manually, but there is plenty of software to make the process easier and It’s important to do it regularly so you can recall the details.

To learn more about how to perform a bank reconciliation you can read the full article here and talk to us for any help.