Reconciling your business’s credit card and bank statements is essential to preventing accounting errors. Mistakes can happen when recording financial transactions. You may accidentally record the wrong transaction or the wrong amount in QuickBooks. By reconciling your business’s credit card and bank statements, you can find and fix errors such as this. Reconciliation is an auditing process in which you match the financial transactions recorded in QuickBooks to those listed on your business’s credit card and bank statements. Below are five tips for smoother reconciliations.
#1) Start With Oldest Statements
There’s an order in which you should reconcile your business’s credit card and bank statements. Always start with your business’s oldest statements while working your way to your business’s newest statements. If it’s been three months since you last reconciled your business’s statements, for instance, you should begin with the oldest statements from three months ago. Assuming there are no discrepancies, you can move on to the statements from two months ago, followed by last month’s statements.
#2) Use the ‘Hide Transactions’ Feature
When performing reconciliations in QuickBooks, there’s an option to hide all transactions after the statement’s end date. You can use this feature to focus exclusively on a single statement. You won’t see transactions from other statements in QuickBooks. When selected, this feature will hide all transactions after the opened statement’s end date.
#3) Place a Checkmark Next to Matched Transactions
You should place a checkmark next to matched transactions. Matched transactions are those that appear in Quickbooks and one of your business’s credit card or bank statements. Ideally, all of your transactions should match, meaning there are no discrepancies. Placing a checkmark next to a transaction in the QuickBooks reconciliation window indicates it’s accurate and, thus, matched to a statement.
#4) Include Interest and Fees
A common mistake business owners make when reconciling their transactions is omitting interest fees. If you have any business loans or credit cards, you’ll probably have to pay interest on them. Some lenders may charge fees as well. Payments involving interest and fees are transactions. And like all other transactions, you’ll need to reconcile them. Make sure the interest and fees recorded in QuickBooks are the same as those listed on your business’s credit card and bank statements.
#5) Match QuickBooks Transactions to Statement Transactions
The transactions recorded in your QuickBooks account should match those on your business’s credit card and bank statements. In other words, don’t assume that your QuickBooks transactions are accurate. Statement transactions are always accurate, so you should make sure your QuickBooks transactions match them.
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