Ideally, you should reconcile your bank account each time you receive a statement from your bank. This is often done at the end of every month, weekly and even at the end of each day by businesses that have a large number of transactions.
Before the reconciliation process, business should ensure that they have recorded all transactions up to the end of your bank statement. Businesses that use online banking service can download the bank statements for the regular reconciliation process rather than having to manually enter the information.
What Is the Purpose of Bank Reconciliation?
The bank reconciliation process offers several advantages including:
- Detecting errors such as double payments, missed payments, calculation errors etc.
- Tracking and adding bank fees and penalties in the books
- Spot fraudulent transactions and theft
- Keeping track of accounts payable and receivables of the business
Bank reconciliation done through accounting software is easier and error-free. The bank transactions are imported automatically allowing you to match and categorize a large number of transactions at the click of a button. This makes the bank reconciliation process efficient and controllable.