Importance of Bank & Credit Card Reconciliation Services for Your Business

In any business, cash is the most important factor. It is the cash which helps in conducting the day to day operational expenses. The payment of the payroll to the employees in a timely manner also depends on the availability of cash. Marketing the products and services also requires cash. Bank account and credit card reconciliation plays an important role in ensuring the availability of cash.

Reconciling the monthly statements and reviewing the general ledger accounts at regular intervals of time will help in taking the right monetary decisions and optimizing the profits and reducing the overhead expenses.

How to execute the reconciliation process in a better way?

Self Awareness: It is important to be aware of your team’s ability to handle and record the bank account and credit card transactions as only proper management of company account records will fetch you accurate reconciliation results.

The Right Attitude: If you are having a mindset that if something has worked in a certain way in the past, it will work in the future as well, it is not going to take you any far. It is important to have the right attitude and get rid of the outdated processes for having a competitive edge.

Trusting Employees’ Adaptation Ability: Fearing employees’ failure to adapt to the new ways of handling financial records or using the latest technology is surely going to make you suffer in the future. Instead, trust their adaptation ability along with your decision-making ability when you hired them.

Standardized & Centralized Approach: A reconciliation approach which is standardized and centralized will not only help you in removing the financial transactions handling roadblocks but will also bring your entire team’s quality levels to a certain standard.

Adopt Innovation: You may have tasted reconciliation success with your past methods and manual spreadsheet approaches. However, it is important to adopt new technologies with the changing times in order to meet the new challenges that come along with the increased number of electronic transactions.

Use Accounting Software: Now new software like QuickBooks has emerged which have made credit card and bank reconciliation services extremely effortless. The reconciliation of credit card and bank services can be easily accessed by using the “Banking” drop-down menu located at the top of the screen in the software. After choosing the “Reconcile” option followed by a few steps wherein you need to enter the transactions related information, you will be able to see whether or not your bank statements match with the copies of your business account records.

Apart from this, this software offers the option of storing information like charges and payments which can be accessed and utilized for the next bank and credit card reconciliation, providing you with an effortless experience in the future.

The advantages of following proper monthly bank statement reconciliation for a business firm are:

• The checks and deposits which were not properly recorded can be tracked.

• The unauthorized wire transactions can be tracked down by using this process.

• The unjustified bank charges can be tracked and the correct posting of transactions is made.

• Detect and prevent embezzlement of funds from within your company.

• Bank reconciliation can also help in escaping from legal penalty. By objecting to unauthorized or forged checks at the right time, you can avoid the chances of cash shortfall or any other risk to the business.

In the modern scenario, credit cards act as a substitute bank account. So reconciling them is as important as reconciling bank accounts.

The various advantages of reconciling your credit card accounts are:

• It helps in recognizing the fake charges, illegal purchases, and wrong posting amounts.

• It offers an opportunity to keep a record of the true liabilities of the business.

• The purchases with missing receipts or online purchases can be recorded.

• The interest charges and late fees can be managed and minimized.

• It also helps in preparing a correct general ledger

• By preparing a correct general ledger you can ensure that the company’s financial records are maintained properly. Any inconsistency like double billings or any unrecorded payments can be easily fixed and the accuracy of the books can be maintained.

Recommended Post:

How Can Technology Modernize Accounts Reconciliation?