Ensuring that a business’s cash account is in balance is a vital part of accounting. Bank reconciliation is, simply put, the balancing of a company’s cash account to its bank account balance.
Reconciliation is an accounting process that both documents and proves that your account balances are in agreement. Reconciliations is a fundamental process ensuring that the actual amount of money spent marries up with the money leaving the account at the end of a fiscal period, be it a month, quarter or year. Tradie Bookkeeping Specialists recommend monthly reconciliations.
There are two way to reconcile an account: by reviewing analytics and by reviewing documents. Documentation review is common and the process involves checking the amount of each transaction and checking that it matches the actual amount spent.
By being diligent, your accounting and bookkeeping specialists will often pick up errors or warnings. For example, you may have several small charges against your credit card which you’ve never really noticed, but when reconciled it becomes apparent that your card has been compromised by a hacker who has been slowly bleeding against your card. Once fraud is discovered the credit card company will reimburse you for the incorrect charges.
But without reconciliation you may never discover this fraud bleeding out your credit card. Credit cards, if used wisely, can be a huge asset for your business and assist with your cash flow and give you what is, in effect, an extra thirty plus days of interest free grace. To use your credit card effectively, you require effective reconciliations.
The less time you have to spend worrying about your admin deeds, the more time you have to spend working on your business, where your skillset is best served.
Compliance requirements from the Australian Taxation Department have tightened more and more over the years with deadlines and month-end close requirements. This has created a need for businesses and companies to reconcile accounts, close books and file financial reports more quickly and more efficiently. This is time consuming and frustrating, especially if you are in such a hands on position that the Trade Services calls for.
How do you run your business and still meet your compliance requirements? Call Tradie Bookkeeping Services. We are steeped in Trade experience, we know all those tricky little compliance issues that are specific to the trade industry and we are right here on the Sunshine Coast.
We know that trade businesses struggle to meet ATO deadlines and if they do, often their bookkeeping is incorrect. Often the rush to complete the compliance costs you and your business far more than it need, simply because of inaccuracy. Monthly balance sheet reconciliations is key to closing the financial books. It confirms and ensures that everything is accurate and with that accuracy you can more clearly understand your business’s financial stability. Cash accounts, inventory, prepaid expenses, accounts receivable and accrued liabilities are some of the most important.
Without reconciliations external advisors such as your bank manager or finance broker cannot determine the credit worthiness of your business. If you require finance to grow and expand your business, it simply won’t happen without effective reconciliation.
There are some automated systems that can be put in place within an effective accounting software package and this is, again, where Tradie Bookkeeping Specialists are at the fore. Setting up new software systems or redefining existing packages so that they work most effectively for your specific trade business is what we excel at.
The school of hard knocks, the trade service you studied hard to learn and excel at: these do not teach you or train you in how to reconcile. You are not taught how to perform general ledgers, process payrolls, reconcile bank accounts or meet GST compliance. You are not taught how to record transactions or set up accounts. You are not taught how to streamline a complicated accounting software system so that it is smoothly seamless and geared specifically for your business.
Effective time management can save you so much money. If you are trying to do it all: run your business, learn how to do your accounts and your payroll, learn how to remain compliant but also financially viable, then you are costing your business money.
Free yourself so that your skills are working in the best, most effective place for your business: out in the field.
Ask Tradie Bookkeeping Specialists how we can help. Use our field of expertise effectively and save yourself and your business. Become financially economical.