Let’s face it: bank reconciliation is painful and tedious. It’s the accounting equivalent of going to your dentist for a cleaning; you don’t have to do it, you don’t want to do it, but it’s necessary if you want to keep your teeth strong and healthy.
The good news is that you can expedite and make the process much less painful through a few simple techniques.
Start by getting all the relevant information together so that you save time and effort.
Organize your invoices and receipts by method of payment.
Download the statement from your bank into an accounting software, and do the reconciliation.
Slowly (better to be slow and do it once than fast and doing it twice).
When you’re done each method of payment, move on to the next type.
File your records
File everything ahead of time. Clean up your office. You’ll be surprised how often you will want to pull an old bill, receipt, or sales receipt out to check against your bank statement.
If your office looks like Hurricane Katrina revisited, you are basically prolonging and maximizing your reconciliation agony. Wouldn’t you rather be doing something else? A few minutes a day spent filing your records saves you hours of frustration when it comes time to reconcile.
Decide beforehand what you can live with if there’s a discrepancy. Can you live with a difference of $1? $10? What about $100? Although there are a few tricks to identify where the difference is coming from, you’ll usually have to re-do the reconciliation over again to see if you can spot where the error is coming from.
Decide whether the difference is worth the time and effort it would take to identify and correct it.
On the other hand, it’s never a bad idea to reconcile to a penny because errors do accumulate and a small error can potentially become a significant and material one. At the end of the day, it’s your dime and your time.
This article originally published on Anne Cabrera’s Sowing Seeds Accounting Services website.