Reconciling (balancing) your checkbook used to be a standard practice for most of us. It was a painfully manual process, back before technology took over and made it much easier. Thank you, technology! I’ll admit that I kind of liked it, probably because my financial life was much simpler and I felt great satisfaction that the numbers matched up when I was finished.
For those of us who are small business owners and entrepreneurs, it’s of great importance that we stay current with our bank and credit card account reconciliations each month. If you have fallen behind, you’ll want to remedy that as soon as possible, especially since we are inching closer to the end of the year.
Why reconcile your accounts each month?
It’s a great way to catch any unauthorized check or debit payments in a timely manner. By taking the time to go through this process each month, you’ll be on top of any suspicious looking activity, whereas if you wait until the end of the year (or never reconcile at all), it’ll be more difficult to track down and figure out.
Reconciling can help keep up with overdue invoices. This is especially true if you’re tracking income and expenses for your business manually or with an Excel spreadsheet. It’s easy to get caught up in all of the other aspects of running your business and let accounts receivable slide, which affects your cash flow.
Most of us know that banks and credit card companies do make errors from time to time. Reconciling these accounts gives you the opportunity to make sure that no unexpected late fees or other charges have been made, and that their records correctly match your records.
By keeping up with your account reconciliations each month, you’ll be ahead of the game at tax time. This means no stress and chaotic rushing around to get your records up-to-date for your tax person! They will thank you, and you will thank yourself.
There are many reasons to take the time to reconcile your bank and credit card accounts at the end of every month. When you do, you’ll be in a good position to make informed financial decisions for your small business during the year.
If you’re unsure of how to perform reconciliations, or if you don’t have the time to devote to this task on a monthly basis, reach out for help! The professionals at Uncanny Bookkeeping, LLC will gladly take care of it for you.