Reconciling an account is essential in any business. Account reconciliation practices involve documenting or proving that your account balance is correct. The types of reconciliations include within the account, control account, within another account and within an external account. General accounts, invoice, bank accounts and asset accounts are some of the areas where reconciliation can be practiced.

Ensure all accounts are reconciled. No account should be left behind even the new accounts. Whether you are doing it yourself or hiring a bookkeeper, make sure the adjustments are accurate, complete and reviewed in a timely manner. It should follow the appropriate accounting principles as well.

Reviewing and improving the process ensures accuracy. Use standard templates for completeness, quality and accuracy. Review the reconciliation report which includes all deposits, beginning balance, ending balance per the books, checks cleared and ending balance per bank statement.

Benefits:

Account reconciliation improves efficiency and effectiveness of account management. You can be able to proactively identify any problems or issues that could result in misstatements. Resolving issues can also be easy and fast if you actively keep your financial records in check.

Furthermore, your financial records are more reliable if they reflect the real status of the accounts. Duplicate charges and fraudulent activities can be spotted if you reconcile your account.

Account reconciliation helps to catch errors, unauthorized charges and unexpected charges as well. Moreover, you may be able to identify items you have forgotten to add to your debit register or checkbook. If you reconcile your accounts regularly, the process becomes easier and faster.

An accounting report each month keeps you up to date with the situation of your accounts. It also helps prevent overdrawing the balance in your account. Furthermore, it helps to avoid going over the spending limit, which can lead to very high overdraft fees.

Account reconciliation also helps to minimize the risk of criminals running up charges of your account. Other minimized risks include wrongly receiving less salary from your company and being overcharged for goods you have purchased.

Steps:

You should ensure you have entered all the details that affect the bank account when conducting the activity. The details include bank credits, checks, bank charges and deposits.

a. Certify that all the necessary details and adjustments have been posted to their respective bank accounts.

b. Compare the records in the account against those of payment receipts and see if it matches. Check off each payment if it matches to ensure success in account reconciliation. You should check off payments that are also due.

c. Identify items you have on record but are not listed on the account statement. Once you have identified these items, you can subtract them from the statement balance.

d. If the balance does not tally with that of the statement in the account reconciliation procedure, then you have an error that needs to be rectified.