Bank Reconciliations - What Are They and Why Are They Important
Why Bank Reconciliations Are So Important While it is important to have an internal record of your business financial records, making sure that the business bank account balance agrees with the internal business record is equally, if not more, important. Reconciling your business bank account monthly will help you to identify any unusual transactions that might be the result of accounting errors , or worse, fraudulent activity on the account. How They Work If you have ever balanced your personal checkbook, then you’re already familiar with bank reconciliations. The concept is no different. You make deposits for money received, in this case usually from customers. You also make payments, often to vendors that you owe or perhaps to pay down a business loan. Some deposits and payments are seen instantly such as with any of the many direct pay options. Other transactions may have a delay such as when you writ...