Reconcile, or reconciling your checking account or actually any account, is a simple matter of printing the statement and comparing it to what’s in your checking account.
Reconciliation should be done on a regular basis and that regular basis can be any increment of time you feel keeps you in the know on your checks written and deposits made.
Once you get caught up on your reconciliation you probably just want to make sure that the checks you’ve written lately are being recorded. Also it can take a long time for some people to deposit a check you’ve written. I have seen some of these checks, even payroll checks taking a month or more before the payee finally deposits their check. These can even be payroll checks.
I asked a guy once why he hadn’t deposited his check for three weeks. He told me that as long as he had an un-deposited check he had money. It was like his savings account.
This is not recommended, hanging on to a check for long periods of time sets you up for losing that check, having it stolen or even getting it destroyed by accident; washers and dryers do horrible things to ink and paper. Also what happens if the check writer is a sloppy bookkeeper, he may not have the funds in the bank when you get ready to cash the check.
Again this brings me back to reconciliation, if you’re reconciling your checking account you’ll know what is really in the account as apposed to believing the bank when they tell you that you have a certain amount available when in reality it is not!
Reconciling your business checking account is a necessity, other businesses and your customers frown on anyone that bounces a check. The bank isn’t cool with bounced checks either, they like charging all kind of fees. On the bright side though, bank fees ARE Tax Deductible!
I can come to your office and reconcile your accounts on a monthly basis.
There are a few software programs out there right now download transactions on a live basis from your checking account at the bank and this is a cool feature but it is easy to get confused, plus when the activity comes in it isn’t attached to an account like “auto expenses’ or “sales’ or “misc income” and you definitely want to have this information recorded with the transaction. Having this detailed info attached to each transaction is what makes a good and accurate P&L and Balance Sheet.
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