Bank Reconciliation Is Crucial for Safeguarding Business Assets
As a small business just starting out, there are often some basic tasks that are set aside in order to focus all energy towards securing those initial sales and getting money rolling in. No matter what business you are in, you should never allow the bank reconciliation process to fall behind. It isn’t simply about knowing how much cash you have on hand; it is also about protecting the business from falling prey to identity theft and fraud.
Even if you check in every day without fail on your bank account activity online, you still need to be comparing that to the activity you are recording on your in house general ledger regularly. In a system such as QuickBooks, the reconciliation process is a very simple task that will also assist with posting monthly interest earned and miscellaneous bank fees to your ledger. This will be critical for maintaining customer service because you will be able to rely on your in house records to quickly answer a billing or payment question.
More crucially, bank reconciliations will help you to identify when an attempt is made to access your account fraudulently. One of the fastest growing versions of theft is for someone to mimic the checks drawn from your bank account and present them for payment. Often these counterfeit items are so sophisticated that they pass by initial processing. They normally start with a small amount that most businesses wouldn’t even notice, and if it goes through, then they ramp up the check presentations. If you are not monitoring your bank activity, a thief could literally drain your account in less than a week.
Similar attempts to access your account can also be made through electronic means should someone get access to your direct banking information through a stolen credit or debit card. Since most small businesses do rely heavily on business credit accounts, this is a very common point of attack. Daily monitoring of online banking activity and weekly or monthly reconciliation to ledger postings will provide a critical protection against anything more than an initial attempt at bank theft.
For information on how we can ensure all your financial processes can remain up to date, contact us.