Solved: End of Month Reconciliation

If you think about the amount of transactions that happen on a daily basis within your business, it’s easy to see how this process can become complex. Even if there aren’t many transactions, timing can play a role in complicating the process. Ultimately, month end close requires that various team members be in the loop and sequentially complete their tasks without delay.

If the financial documents required for the month-closing process are stored in different locations, it will be cumbersome to access them quickly. So, a centralized repository is recommended to ensure the smooth collection of data. The accounting department often takes a lot of time to complete the month-end close process. But, business leaders want to streamline and make the process faster as the month-end close numbers act as a starting point for the plans for the upcoming months.

Month end reconciliation is the process of comparing and matching two sets of financial records at the end of a month. It is commonly performed by businesses and organizations to ensure that their financial statements accurately reflect the transactions that occurred during the month. The reconciliation of bank statements is a critical step in maintaining accurate financial records for any business. It helps to ensure that the company’s accounting records are up-to-date and accurate, which is essential for making informed business decisions.

Benefits of Month-End Reconciliation

Reconciliation isn’t just about transactions; it’s about ensuring your employees get paid correctly and that your tax calculations are spot-on. Precision is key here – you want to avoid any unhappy employees or auditors knocking on your door. Cash management software can integrate with many data sources, ensuring consistency in data requirements and quality.

  • Often this is a bank or credit card statement that you get in the mail.
  • Find professionals with solid track records (like us!) to handle your finance work.
  • Not everything of value in the organization can be set to a cash amount.
  • Reconcile deposits and receipts for this fund to ensure your petty cash balance is what you expect it to be.
  • Has a customer not finished a payment yet, or have you forgotten to send an invoice?

– said without knowing how many transactions this company did on an average month… Each month as part of the month end reconciling process you will want to confirm that your GL Accounts Receivable account ties to your receivables sub-ledger. Reconciliation protects against financial deception, deterring fraudulent activities and underscoring commitment to regulatory compliance. This practice assures investors of financial integrity, fostering security and confidence in the company. Payroll is the lifeblood of your business, and taxes are the unavoidable reality.

Month-end Reconciliations – A Masterclass in 6 easy steps

The petty cash fund accounts for tiny purchases that are so easy to overlook. Develop workflows that allow for automatic processing and recording of petty cash transactions. The entries in your financial statements must match the entries from bankers, vendors, and other entities. Account reconciliations help you spot mistakes in your financial reporting.

Conduct a final review

It is a best practice to check that their balance sheet numbers are accurate and match the bank statement. If any discrepancies or fraudulent charges are identified, the required changes are made to the balance sheet. Automation is the key to reducing the time and effort required for the month-end closing process.

Acquire Bank Statements

Missing a step can alter the growth of your business for many different reasons. Every business must document or verify account balances, this process is referred to as reconcile accounting. Reconcile accounting is figuring out how much money is sitting in your account. However, to accomplish this, you must keep track of records of every transaction that transpires. Some small business owners underestimate the importance of the month end close process. They may not see how tracking what happened during the previous month helps them set a company up for success in the future.

Have this person check all financial statements, as well as your general ledger. You’ll parse through a lot of financial information during these account reconciliation processes. In the event that something doesn’t match, you should follow a couple of different steps.

This document summarizes banking and business activity, reconciling an entity’s bank account with its financial records. Bank reconciliation statements confirm that payments have been processed and cash collections have been deposited into a bank account. To implement the reconciliation process effectively, follow the step-by-step guide provided depreciation definition in the article. This includes cross-checking your bank statements, credit card statements, and any other financial records against what you have in your books. Reconciliation of bank statements is the process of comparing the transactions recorded in the company’s accounting records with the transactions listed on the bank statement.