A bank reconciliation statement provides information relating to your banking and business activity that reconciles your business organization’s bank account with its financial records. The statement summarizes the deposits, withdrawals, and other activities that have an impact your business’ bank account for a specific period of time. All businesses, whether big or small, take the help of this tool for various reasons. The importances of your bank reconciliation statement for your business are mentioned below.
Identifies Difference Between Bank and Book Balance
With the help of a bank reconciliation format, you can identify the difference between the bank balance and the cash book balance. This is necessary as sometimes the transaction may not be settled in your bank account due to various reasons and your cash book may show a different figure. As a result, there can be a mismatch and this mismatch is easily identified with the help of a bank reconciliation format. Moreover, it helps your accountant to make any necessary adjustments and correction in the books of accounts.
Acts as a Control Mechanism
For any business, the funds are the most important assets, and the purpose of bank reconciliation statement is to act as a control mechanism to protect this valuable asset. A detailed copy of your bank reconciliation format indicates if there has been any unauthorized withdrawal of funds from the bank account. Thus, if someone has withdrawn your business funds without your consent, then you can easily spot the person with the help of your bank reconciliation statement.
Checks the Accuracy of Entries
Another purpose of bank reconciliation statement is to enable you to check if the entries are correctly entered in the books of accounts. Thus, you can use your bank reconciliation statement to check if the accountant has entered the figures correctly in the book and that there are no misleading entries in the financial statement.
Update Your Cash Book
Sometimes, it is not possible to remember all the transactions and record them in your cash book. This is where you can take the help of your bank reconciliation statement to update your cash book. Moreover, your bank reconciliation statement will be error-free. So if there are some entries that you have incorrectly entered in the cash book, you can correct it.
Indicates Delay in Payment
You can use your bank reconciliation statement to understand why certain check payments have still not been settled. So if there has been any undue delay or clearance problem with respect to the checks, then the reason for the delay can be understood with the help of your bank reconciliation statement.
The purpose of bank reconciliation statement is to ensure that there is no problem with respect to your financial transactions and that the accounts are settled correctly. If you are too occupied to get your bank reconciliation statement and make changes in your books of accounts, then it is recommended that you take the help of a professional accountant to help you out.