Why Is It Important For Companies To Reconcile Bank Statements Every Month?

A Bank Reconciliation is a process used by various businesses to match the balances in business accounting records to the corresponding bank statements. The main motive of reconciling the bank accounts is to ensure that the recorded balance of the company and the bank statement match up. Likewise, QuickBooks also provides you with the feature of Reconcile Bank Account in QuickBooks using which you can easily compare the balance of the bank statements to that of the company balance. However, there are several other reasons due to which it is important for the companies to reconcile bank statements at the end of every month. In this blog, we have listed all such reasons to provide you with a clear vision of why bank statements are reconciled every month. 

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What are the reasons due to which you need to reconcile bank statements every month?

Below we have listed all the reasons due to which you need to reconcile bank statements every month:

• Fetch Errors:- Reconciling the bank accounts will help the companies find any irregularities such as wrong amounts, duplicate entries, and other data entry errors. Even after implementing the strict rules, companies might face errors while reconciling the accounts. If the companies fail to reconcile the statements every month, they won't find the discrepancies in the account. Thus it might cause a significant loss in the future to the company.

• Accurate Tax Reporting:- Another main reason for reconciling the account every month is that it ensures an appropriate tax return. Once the bank statements match with the corresponding of the company’s account you can easily calculate the tax and file accordingly without any delay in tax filing and other issues.

• Keep A Close Observation On Company's Performance:- There might be certain instances when the small companies do not consider much on the short income issues and shortfalls. Similarly, while using QuickBooks, the business needs to reconcile bank accounts in QuickBooks. This is so that you can know about the financial status of the company and spot income fluctuations for the company's growth.

• Loss Prevention:- If the bank statements are not monitored and reconciled then in that case the potential for undetected loss is also high. Not all the employees are so kind and loyal that they can return you the money on time without asking you to return. This is how most of the companies have to bear heavy losses and thus cause damage to the company. Reconciling the bank statements will help you to avoid certain losses and you can figure out the solution to the accounting error.

Summing It Up!!

We hope that the reasons listed above will help you to know why it is essential to reconcile bank statements every month. Similarly, in QuickBooks you can reconcile bank account in QuickBooks to find the issues you find while preparing the records and resolve them immediately. If you are looking for any additional help then contact our experts by dialing the helpline number