Bank Reconciliation Template

Description

Bank Reconciliation

Bank reconciliation is the process of matching the balances in the accounting records of an entity to a cash account with the corresponding information on the bank statement. The objective of this process is to ascertain the differences between the two, and to record changes in the accounting records as appropriate. The information on the bank statement is the bank’s record of all transactions affecting the entity’s bank account during the past month.

Bank reconciliation must be completed at regular intervals for all bank accounts, to ensure that the company’s cash records are correct. Otherwise, you may find that cash balances are much lower than expected, resulting in bounced checks or overdraft fees. Bank reconciliation will also reveal some types of fraud after the fact; This information can be used to design better controls over the receipt and payment of cash.

Benefits of Bank Reconciliation 

The importance and purpose of bank reconciliation may already be enough to convince you to start implementing this process in your company. But there is more – we will now discuss the various benefits of bank settlement, which may encourage you to learn more about it. Following are the various benefits of bank settlement:

Bank reconciliation is essentially matching a company’s accounting records to its bank accounts and statements. When you discover any discrepancy, you should start looking for the reason for it or the reason behind it. You will usually be able to find the reason – which will be either checks not yet posted, interest added on an account, or other such reasons. However, if you cannot find the cause of the discrepancy, there may be fraudulent activity in your company.

There are times when bank statements are not updated as cash outflow tends to lag. In cases when your company is operating on minimal funding reserves, you would need to know how much money you have at the most current time so you would avoid overdraft or spending more than what you have.

Banks are not perfect institutions and neither are the people who work in them. There may be cases when bank errors are committed by the system or by the people handling the transactions. In doing regular bank reconciliation, you would be able to identify these errors early on and inform your bank that the errors exist. In doing this, you will also be able to see whether the errors have been made by the bank or your own people.

Item specifics

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