Bank Reconciliation

We Reconcile Your Banks and Business Control Accounts

When You Need A Business Bank Account

Sole Trader – you do not have to have a business bank account, but you don’t want your private transactions in the same account.

Partnership, Company or a Trust – to comply with taxation laws you MUST have a separate bank account. This account must be reconciled.

Common Mistakes Made When Reconciling Bank Feeds By Users

• Agree to transaction the software presumes without reading what it is they are agreeing to, and was not what the transaction was for.
• Reconcile internal business transfers the wrong way around – you must do your transfer before you receive the deposit.
• Reconcile a bill paid to with spend money leaving the bill unpaid.
• Reconcile money received with receive money leaving the customers invoice outstanding.
• Wrong allocation of BAS Codes.
• Not reconciling to the correct Card File. 
• Duplicating Card Files for Cards already in the system.

All kinds of mistakes, which are time consuming and costly to fix.

Why Does Bank Reconciling ALWAYS Needs To Balance To The Cent?

• If it is out just 1, with bank feeds working it is NEVER usually just one cent!
• If the bank is out it is likely to be one or a series of incorrectly reconciled transactions going back as far as when it was last reconciled correctly.

Reconciling Is To Make Sure You Have Not Missed A Bank Transaction

Reconciling is the process of matching your software source journals (such as bill paid, income received, direct debits, bank fees, interest) taken up in your accounting software, with the bank balance on the Bank’s statement of the same account and the same dates.

When Should You Check Your Bank Statement Agrees With Your Bank Software Balance?

This process of reconciliation for most trading small businesses should be done at month end, and ALWAYS before reporting of legal and tax obligations. It is imperative to make sure the bank balances to the cent. 

With Bank Feeds It Is Critical To Know The Difference Between

• Spend Money v’s Accounts Payable, and
• Receive Money v’s Sales Invoicing.

Too often we see clients with a list of unpaid bills that are paid entered via spend money, and clients chasing money from customers that have already paid.

With bank feeds running we generally advise to reconcile banks weekly if not daily; so you can recall what you purchased, what you owe, and who owes you. The length of time between reconciliation can have a great impact on your business.

Too Long Between Bank Reconciliation Can

• Make you forget what the bank transaction was for!
• Delay sending out customer statements, slowing cashflow, resulting in late payment of creditors and missing out on discounts given for paying on time.
• Late lodgement in financial taxation and other legal business obligations.
• Harder to chase missing invoices for costs/expenses incurred missing out on tax deductions.
• Fines and penalties.
• Delay business funding.
• Prevent business growth. 
• Reduce creditor payment terms. 

Did You Know Bank Accounts Are Not The Only Accounts That Need Reconciling?

The following accounts, known as control accounts, also need to be reconciled before processing business reports.

• Payroll Clearing Account
• Superannuation Payable Account
• GST on Accrual Basis
• GST on Cash Basis
• PAYG Withholding
• PAYG Income Tax
• ATO Integrated Client Account for
• BAS
• ATO Integrated Client Account for
• Income Tax
• Wages payroll reports with expense and liability accounts
• And More depending on your Chart Of Accounts