Why should I reconcile my bank every month?
We are frequently asked, “Is it really necessary for me to reconcile my bank? It downloads into QuickBooks Online and I record everything there.” The answer is, YES! It is incredibly important that you are reconciling your bank and credit card accounts every month.
There are three main reasons you should do this:
Find Duplicate Transactions
Duplicate transactions happen all the time in QuickBooks Online. The feeds between QuickBooks and the bank often have little hiccups, if not breaking all together. When this happens, transactions often get brought into the banking screen more than once, creating duplicate transactions. If you don’t reconcile your bank, you could be reporting too much income, or too many expenses. Just last week, we had a client’s feed between Bank of America and QuickBooks Online not connect for a couple days. When it finally did connect, it brought in two weeks’ worth of transactions that had already been recorded. Had we not been reconciling the bank, we may have never found them.
Find Missing Transactions
While duplicate transactions may happen, the opposite can be true as well. Potentially, when there is a glitch in the feed between QuickBooks Online and the bank, whole days of transactions will not come through. If this happens, you may not be reporting enough expenses, or income. We find this is frequently the case with QuickBooks, and unless there is a transaction you are specifically looking to remember, you likely won’t even notice the day was skipped!
Find Outstanding Checks
If you mailed a check to your vendor 60 days ago, you would expect that they have already taken the check to the bank and the check has cleared your bank account. How many of us are guilty of forgetting the checks we send? I am for sure! 😊 When I reconcile my bank, I always look for checks that still haven’t been cashed and were sent out 30 days or more prior to reconciliation. If I find any of these, I call my vendor immediately to make sure they received the check. I do not want to pay late fees or have a vendor angry at me for not paying while the check possibly got lost in the mail. If you reconcile every month, you will find these checks and be able to keep your vendors happy.
Reconciling all your bank and credit card accounts often seems like a tedious task, but it makes sure your financial information is correct. You can’t run or grow your business on inaccurate information!