All the businesses out there have to deal with fraud or dishonesty occasionally. These genuine errors could legally cost businesses plenty. The act of generating bank reconciliation statements is all about comparing their internal records to the records given by the bank, which manages their financial aspects. The bank reconciliation statement in QuickBooks offers several benefits to both the bank and the business or company. Some of the primary advantages are given below:
If you want to manage your account while opting for QuickBooks services, monthly bank statement details consisting of every transaction can serve as a key tool for your purpose. These statements generate a direct link between your accounting system and the bank’s records. It can be advantageous for you in many ways:
Checks for errors:
A financial institution processes a sheer number of transactions per day. And occasionally, a mistake may take place. Thus, you need to reconcile your bank account every month, as it will allow you to notice if your financial institution makes any mistakes while inputting and processing every transaction. If you want to find errors in your financial records, the statement can also prove to be handy. Even if you log in your transactions regularly, you may miss one transaction, or you may enter an incorrect number in your records. Additionally, a bank reconciliation statement allows you to compare your records of cash withdrawals, debits, and checks drawn on your bank account, along with adequate information. This comparison of transactions can help both side to understand the penalties and fees charged. For instance, a bank may charge fees if a company stops payment on a check or has an overdraft. Also, for the payments that haven’t arrived, they can charge penalties, even if the company’s records say that it has been paid.
Balances your account:
For balancing your account, a bank reconciliation statement is considered to be one of the best tools. The statement will help you to verify what bill payments, debit card charges, and checks came out from your bank account. It will also enable you to identify payments or checks that did not come out from your bank account as per your plan. Moreover, it gives you a wider sense of your actual balance, as it considers the charges that are still outstanding. If you get interested or earn any other benefits like fewer fees for maintaining a certain amount in your account, properly balancing the checkbook will make sure that you stay at that level. It also helps each side to have a clear understanding of where the unexpected charges are originating. It will help both sides to narrow down their area of weakness in the internal process structure of the company.
Identifies potential fraud:
Fraudulent use of money is nothing new, and it is increasing day by day. So, reconciling your bank account will help you to detect fraudulent use of your money. Fraudulent charges often remain unnoticed if they are not closely monitored. It is more particular when one has a high account balance. Indeed, financial institutions catch the misuse eventually, but a reconciliation statement helps you to detect the problem right away. If you can identify the unauthorized use of your account early, it will prevent all the additional charges and will also allow the bank to restore your bank account. After the processing of the matching statement is completed, each of the discrepancies is examined by the businesses to make sure whether there is any legitimate error or if it is a precursor to false or fraudulent accounting. Thus, if you are not preparing any bank reconciliation statement, you are making some real mistakes.
Helps to track account fees:
A bank reconciliation statement also shows you all the fees that your financial institution has changed. Fees like these are seldom tracked by the consumer. The statement helps you to verify that the charges from your credit union or a bank are valid and are associated with your account terms. Reviewing the statement regularly will help you to notice if your bank has started to charge a new fee. For accurate account balances, you can input those fees into your financial records or accounting program.
Many businesses out there can find their financial accounts encountering some errors and mistakes. Before preparing a bank reconciliation statement in the QuickBooks report, make sure to have a conversation with your bank. If you detect any fraud or encounter any misunderstanding related to accounting, note down the details and perform a review to make sure that you are right, and if your issue is still not solved, contact your bank.