What Do Bookkeepers Do All Day? Understanding Bank Transaction Reconciliation

What Do Bookkeepers Do All Day? Understanding Bank Transaction Reconciliation

Ever wondered what bookkeepers do all day? One of their key bookkeeping tasks is the bank reconciliation process, a crucial step to ensure your business's financial records are accurate and up-to-date.

Bank Reconciliation Demystified

Bank reconciliation is the process of making sure your bookkeeping records match the bank's records. Imagine you have a bank account and every month you get a statement showing all your transactions. You compare this statement with your own records of what you spent and received. You add any missing transactions, check for errors, and update your records for things like bank fees or interest.

The goal is to make sure the balance in your records matches the bank's balance. If they don't match, you investigate to find out why. This helps ensure your financial records are accurate.

The Bank Reconciliation Process

It is not rocket science nor does it always require expensive software. If you have time, you can do this yourself in a spreadsheet.

• Import Transactions: Start by importing transactions from your bank into your bookkeeping software (or Excel).
• Compare Statements: Take your monthly bank statement and compare it to your business's Cash account in the chart of accounts.
• Identify Outstanding Items: Add any outstanding items, like checks that haven't been cashed yet, to your bank statement total. Write the new total at the bottom.
• Check for Errors: Review transactions on the bank statement for any errors. If you find any, contact the bank immediately.
• Adjust Cash Account: Update your Cash account to reflect bank-generated transactions, such as service charges and interest payments.
• Match Balances: Ideally, the corrected bank statement balance and the Cash account balance should match. If not, you'll need to dig into both records to find the discrepancy.

Dealing with Discrepancies

When balances don't match, finding the problem can be challenging. If you reconcile accounts monthly, you can narrow your search to recent transactions. However, if you haven't been consistent, you might need an accountant to help find and fix the issue.

Bank transaction reconciliation might sound tedious, but it's essential for accurate financial records. By keeping up with it regularly, bookkeepers ensure your business's finances are always in order.

Managed Bookkeeping with Glove

Managed bookkeeping takes the pain and stress out of the bank reconciliation process by handling all the tedious details for you. Bookkeepers automatically import transactions, compare bank statements with your records, and make necessary adjustments. They quickly catch errors and ensure your financial records are always accurate and up-to-date. This service saves you time and reduces the complexity of managing your finances.

At Glove, we provide top-tier managed bookkeeping services to take the hassle out of your bank reconciliation process. Let our expert bookkeepers ensure your business's financial records are accurate and up-to-date, so you can focus on growing your business.

Learn more about our managed bookkeeping services today! Book a free consultation.