3 Reasons to Perform Monthly Account Reconciliation
November 19th, 2015 | 2 min. read
Reconciling your accounts on a monthly basis is important to keep your business on track. With accurate and timely account reconciliation, you’ll be able to keep tabs on your financial health and make better business decisions in the future.
Three reasons to perform monthly account reconciliation:
1. To Catch and Correct Accounting Errors
No matter how good your accounting system is, there’s still the potential for human error. Letting these mistakes go undetected can be extremely costly to your business. By reconciling your accounts every month, you can spot these errors before they damage your bottom line and help prevent mistakes in the future.
2. To Follow Up on Your Transactions
It doesn’t happen very often, but sometimes checks can be lost. If clients say they haven’t received one, what do you do about it? If you’re reconciling your bank statements every month, you’ll be able to see the checks that haven’t cleared. That way, you can find these missing payments and correct them.
3. To Track and Compare Your Business Performance
If you don’t reconcile your bank statements monthly, you might not be aware of potential financial problems, such as insufficient income. Monthly account reconciliation shows you exactly where you stand. And, it lets you track your performance over time, meaning you can compare the current month's numbers to the previous month or year over year.
Even if you don't have an accountant on your staff, you should still be “closing the books” every month. With monthly insight into your cash flow, you’ll be better able to track your progress and avoid costly errors. If you don’t have time or capacity to do this in house, a professional monthly accounting service can provide you with the accurate financial tracking you need.
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Image by Dafne Cholet via Flickr, licensed under CC BY-2.0.
Brian began working at CSI in 1996, and he purchased the business in 2002. As Owner, his primary role is in the management and growth of the firm. Since 2002, the firm has more than quadrupled in size. In 2009, Brian started CSI’s payroll service to complement CSI’s accounting and tax services. Brian received his Bachelor’s degree from the University of North Dakota, with a double major in Accounting and Financial Management. He’s a member of both the National Society for Tax Professionals and the National Society for Accountants, and he serves on the board of directors for the Professional Association of Small Business Accountants, where he was once president. Brian also serves on the business advisory council for Opportunity Partners, an organization that helps people with disabilities find employment. He’s also contributed to several business books, including Six Steps to Small Business Success and The Lean Mean Business Machine. Fun Fact: To help put himself through college, he used student loans, delivered pizzas, and worked summers in a salmon processing plant in Alaska.