Don’t Let Your Bank Rec Turn into a Train Wreck!

Bank reconciliations may not be the most exciting part of our work, but they are one of the most critical. They can also be time-consuming and easy to put off. The problem is, those “little” issues don’t disappear—if ignored, they multiply and often turn into big problems that are much harder to fix later.

That’s why it’s essential to complete your bank reconciliations every month and resolve discrepancies right away. Doing so not only makes future reconciliations easier, it also ensures your cash balances are accurate and the financial information you provide to others is reliable.

Key Steps for a Successful Bank Rec

When reconciling your accounts, make sure you:

• Post all receipts, checks, electronic payments, and other transactions.

• Clear checks listed on your bank statement (manually or by importing a file, depending on your system).

• Match deposits posted to your bank account.

• Record any other debits or credits on the statement in your system.

If your accounts don’t reconcile after these steps, check for:

• Journal entries to cash that haven’t cleared.

• Transfers between accounts not completed before the statement closed.

• Posting errors made by the bank.

• Other items on the bank statement that have not been posted to your books.

  
  

Any errors or adjustments should be corrected immediately so they don’t carry forward into the next month. This makes future reconciliations much easier!

Keep It Simple

One of my other recommendations: keep the number of checking accounts to a minimum. While it may sometimes be politically necessary to maintain accounts at different banks, there’s rarely a functional reason to have more than one. The more accounts you manage, the more reconciliations you need to complete—and the higher the chance for errors, especially when transfers are involved.

If multiple accounts are unavoidable, make sure any transfers are processed before the last day of the month. This helps keep your books clean and avoids posting Due To/Due From amounts between funds.

Final Thoughts

Bank reconciliations may feel tedious, but timely, accurate work in this area is essential. Most accounting systems, like Vista, include reconciliation tools designed to walk you through the process—use them to your advantage and reach out if you run into an issue.

A little extra diligence each month prevents a train wreck down the road.