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Why Bank Reconciliation is Important?

Bookkeeping is essential in the management of your business in a well-versed technique. It is vital that you take an organized, transparent and updated bookkeeping. One of the methods to maintain your business's books is bank reconciliation.

Bank reconciliation is the procedure of matching and comparing figures from accounting records against those existing on a bank statement and finding any discrepancy in bank statement or accounting books. The discrepancy may occur n the balances due to the different timing of recording information in the bank account and companys accounting books. Such discrepancy is normal and will be adjusted automatically within a short period. But sometimes the difference is due to an error, and it must be corrected manually and to catch the error you need bank reconciliation. Generally, companies perform bank reconciliation at the end of each month.


The reasons for the bank reconciliation

Monthly bank reconciliation keeps your company's financial statements clear and current.

It eliminates erroneous backlog

Easy access to reports, thus offering you clear picture how good or bad business is doing.

It makes important updates to general ledger and receives timely entries from the other applications

Provides the ability to eliminate bank statement errors

Enables to control cash flow with the void checks and stop payments function

Verifies the amount of cash in your account

It uncover irregularities

It is important to go through the bank reconciliation process. If not, you take risks.

In the absence of bank reconciliation, you can not have a clear idea of how much money is available in your account. You can return the checks and overdraft fees. With electronic replacement, you do not have much time to your account when you write checks.

In the absence of bank reconciliation, you own risk. People can steal your account. If you have never informed of any transaction, you never know.

About the author: Hitech Bookkeeping Services is a premier provider of accounting and bookkeeping services for small, mid-size and large businesses across the globe. If you require more information about our bank reconciliation services, please contact us at info@hitechbookkeepingservices.com.

Source: http://www.articlesbase.com/business-articles/why-bank-reconciliation-is-important-1021057.html



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