The importance of regular bank reconciliations

Bank reconciliations ensure the accuracy of your organisation's financial statements and helps maintain financial integrity. Get into the habit of doing it often. Putting it off can mean lost records or not remembering what transactions were for, or not noticing fraudulent transactions in time to rectify them, as well as your in-software reports not generating accurately.

A bank reconciliation involves a comparison of your income and expense records against the actual bank statement records your bank has. It is a critical financial process to identify and rectify any discrepancies or errors between your internal financial records, with the transactions in the bank accounts.
Bank reconciliations keep your bookkeeping accurate and can help lower your tax, alert you to fraud, and allow you to track costs. They are essential for several reasons.

• Firstly, they help detect and prevent fraudulent activities or errors, such as unauthorised transactions or bank fees.
• Secondly, they provide a clear picture of your actual cash position, allowing for better cashflow management and informed financial decision-making.
• Thirdly, by reconciling regularly, you can also identify any outstanding checks or deposits that haven't cleared, ensuring that you have an up-to-date understanding of your financial health.

Manual reconciliation can take a long time, but there are plenty of software options available in Australia to make the process much easier.

Check out the below links to get a better understanding of how to reconcile your bank account transactions in Xero, MYOB (desktop or browser) and Quickbooks Online.

• Xero
• MYOB
• Quickbooks​​

We also offer a bookkeeping service which can be incredibly helpful to maintaining your file and preparing monthly and/or quarterly lodgements with the ATO. Get in touch with us for more information about this.