Many times, hotel management do not reconcile their bank statement at the end of each month. Some experts say that reconciling is done to minimize the risk of fraud and embezzlement. Some other experts said that hotel owners just might want to save time for something else more important than simply reconciling their bank account. For those who don't know yet, please allow me to explain what bank reconciliation is all about.
Bank reconciliations are often needed to obtain accurate information on the company's financial status. Reconciling the checkbook every month prevents mistakes from taking place, which can affect balance sheets and income statements later down the road. The accuracy involved with monthly reconciliations helps make the preparation of financial statements much easier.
Recording every financial transaction is crucial to the success of your bank reconciliation so always make sure that you are recording all transactions, regardless of whether they are processed by your bank or not. Keeping organized records can help you stay on top of this task since it will be easier to find any discrepancies or issues that may arise during the process. Bank reconciliation is usually the most laborious activity during the accounting process since it requires you to perform tedious research and processing of data. However, some tips can help you normalize this routine and make it more efficient.
Here are 9 banking reconciliation tips:
- Do not rush
- Use your reports
- Never use balance forward
- Match cash payments with checks received
- Report all transactions which were not processed by your bank
- Check the date on cash receipts
- Leave time to reconcile your account
- Reconcile in batches/blocks of transactions
- Keep organized records
When it comes to reconciling your bank account, it's important not to rush through the process. Rushing can lead to mistakes and inaccuracies in your records. Instead, take your time and go through each step carefully so that you can ensure an accurate reconciliation.
When going through the reconciliation process, you should make use of all your bank records and reports to help find any discrepancies. This can be done by adding up each transaction manually as well as using software such as accounting software or spreadsheets that help automate this process.
As mentioned previously, the balance forward should not be used during a bank reconciliation since it will skew your final numbers and lead to inaccurate results. Instead, start with the ending balance from the previous period.
Another tip is to match cash payments with deposited checks so that there aren't any transactions falling through the cracks and leading to incorrect balances for this account. However, if you happen to receive a check after making a cash payment during this period, you should include it in the cash payments and then match it with the deposited check to keep every transaction accounted for.
When reconciling your bank account, you should include any transactions that were not automatically processed by your bank as well as any deposits or checks made after reconciliation cut-off. This is because all financial data must be included for your records to be as accurate as possible.
To maximize efficiency during a bank reconciliation process, try to reconcile in batches so that each period does not need to be reviewed multiple times. Also, by breaking it down into smaller chunks of time, you can minimize errors and focus more on accuracy than quantity. However, if you cannot do these reconciliations this way due to whatever reason, at least try to reconcile in blocks instead of one single transaction at a time.
Ideally, when looking for ways to make the bank reconciliation process more efficient, you should consider using a combination of these tips to help streamline the task. In this way, you can be assured that your accounting process is running as smoothly as possible.
There are two main reasons why hotels must reconcile their bank accounts every month. The first reason is that "honest" mistakes can occur when making deposits and withdrawals from an account. These honest mistakes can result in insufficient funds or overdrawing, creating a negative balance that must be reconciled as soon as possible.
Hotelier Books helps your hotel or hotel group to ensure its financial statements are accurate and can be relied upon for decision-making purposes. That’s not all, hotelier books also let you automate daily sales, report generation, payables processing, receivables management, and perform accurate budgeting and forecast. Recording and tracking financial transactions are made easy here, so you can effortlessly and swiftly identify any unusual transactions and accounting flaws.
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