Reconciling your business account is arguably one of the most important elements of ensuring you have a clean set of financials. The process of reconciliation involves the comparison of what’s on your business books to what’s reported by your bank.
There are instances when the two accounts don’t match - such as in the case where the business books contains duplicate transactions. Another scenario where the books may not match is when there are missed transactions or transactions that were entered into the bank account but never made it to the business books. In either case, this can cause either an under-reporting or over-reporting of the business financials.
Reconciliation is one of the methods used to help close the gap and ensure a sound set of financials for the business. When business financials do not mirror what’s reported at the bank, the business should seek the council and guidance of a qualified professional. After all, key decisions are often made based on the financials of the business. Therefore, all business accounts (checking, savings, credit cards, etc.) should routinely be reconciled.