Bank reconciliation is an accounting practice that consists of validating all the financial data entered in the company system against the information shown on the bank statement.
In simple terms, it is a checklist or comparison between the two types of documents (company report + bank statement).
The goal of bank reconciliation is to ensure that the financial figures on both sides match and to flag possible irregularities in the numbers or even in the entries.
It is not necessarily a difficult practice, but doing the reconciliation carelessly can compromise the accuracy of the information entered in the system and, as a result, affect decision-making.
To optimize the process and keep your team from facing problems or errors related to bank reconciliation, we prepared this material presenting the 10 best practices to guarantee a proper review.
We hope you enjoy it!
But first, why do bank reconciliation?
Bank reconciliation is a practice that, besides keeping financial information up to date, can be used as a strategy to improve control over resources.
When reviewing the balance for a given period, for example, the professional in charge can identify whether the company had more outflows than inflows, how much it paid in fees or interest due to a late payment slip, or even check whether suppliers made the agreed deposit.
Beyond these points, the practice offers other interesting benefits:
- Detection of irregularities: by comparing internal records with bank statements, you can identify errors, discrepancies, and suspicious activity, such as fraud or improper charges, and resolve these problems before they even become critical.
- Better decision-making: once the information becomes accurate and reliable, managers gain more confidence to design actions and make strategic decisions that support financial growth. These decisions may involve budget planning, investments, and resource allocation, for example.
- Cost reduction: with a holistic view of all cash outflows, the professional can identify opportunities to cut costs, such as fines and interest resulting from late payments or bounced checks.
- Tax and financial planning: bank reconciliation can also help managers build tax and financial plans, since the information in the system provides the foundation to organize tax payments, investments, and future receipts.
- Audit support: if the company goes through an audit, professionals can access an up-to-date record of all financial transactions, which will not only make the work easier but also ensure the company is compliant.
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Practices to optimize bank reconciliation and improve financial control:
Set a review schedule
By doing this, the company can:
- Ensure information is always up to date;
- Eliminate the incidence of errors;
- Identify bottlenecks in the entries before they become critical.
The review frequency should be defined considering the volume of transactions and the financial complexity of the organization.
Keep internal records organized
This organization should include categorizing every transaction by entry date and account type. That way, the company will not only speed up searches but also simplify the presentation of financial reports for decision-making.
Review the structure of bank statements
Make sure all incoming and outgoing transactions on the statements are listed correctly. This procedure will help you identify inconsistencies in the dates that could delay entries or even confuse teams when checking the information.
Find the source of discrepancies
When you identify a discrepancy in the numbers, check whether it originates in the internal records or the bank statements. If the problem lies in the entries in the company system, investigate what may have led the team to make that entry (inattention, confusion about amounts, mixed-up documents, among others).
Create access guidelines and policies
By doing this, you ensure that only authorized personnel have access to statements and systems and make entries. These conditions may include, for example, defining authorizations, passwords, and per-user entry limits.
Perform daily or weekly reconciliations
Companies usually have a high volume of financial transactions, so the recommendation is to run the reviews daily or weekly. This spreads out the workload, maintains tighter financial control over the information, and detects discrepancies faster.
Maintain good internal communication
Good communication helps everyone involved clarify questions and identify entry errors, and it contributes to a harmonious, collaborative work environment. So invest in messaging apps such as Slack or even WhatsApp to make information sharing easier.
Train the team
The success of the reconciliation depends on the people reviewing the entries. That is why it is necessary to train everyone involved so they know how to do the work, how to identify errors, and what steps to take when they find problems.
Archive every document
Keep a file of all statements requested from the bank, organized by period and checking account. This makes information easier to access if someone identifies discrepancies in an entry in the future, and it eliminates the need to call the bank and request copies of documents. This documentation can be physical or digital.
Use financial management software
These tools allow automatic import of bank statements and simplify the reconciliation of internal records. Management systems also tend to offer advanced reporting features and indicators, giving managers a more holistic view of company finances.
The Useall ERP is business management software that can automate the reconciliation process. To learn more about the tool and how it can help your financial control, contact our team directly!
Originally published in Portuguese at useall.com.br.