How to Do Bank Reconciliation?

1. How to Do Bank Reconciliation?

2. To do a bank reconciliation, you must match the cash balances on the balance sheet with the corresponding amount on your bank statement, determining the differences between the two to make changes to the accounting records, resolve discrepancies, and identify fraudulent transactions.

3. How is a bank statement reconciled? • To reconcile a bank statement, the account balance as reported by the bank is compared to a company's general ledger. • Companies maintain a cash book to record both bank transactions and cash transactions. The cash column in the cash book shows the cash on hand, while the bank column shows the cash in the bank. • Similarly, the bank also maintains an account for each customer. In bank books, deposits are recorded on the credit side, while withdrawals are recorded on the debit side. The bank sends the account statement to its clients every month or at regular intervals. • Sometimes these balances don't match. The company needs to identify the reasons for the discrepancy and reconcile the differences. This is done to confirm that all items are posted and that the ending balances match.

4. Bank reconciliation: a step-by-step guide • You will receive a bank statement, usually at the end of each month, from the bank. The account statement details the cash and other deposits made in the company's checking account. The statement also includes bank charges, such as account service charges. • Once you have received it, follow these steps to reconcile a bank statement:

5. 1. COMPARE DEPOSITS • Match deposits on business records with those on your bank statement from best reconciliation platform. Compare the amount of each deposit posted on the debit side of the bank column of the cash book with the credit side of the bank statement and the credit side of the bank column with the debit side of the bank statement. Check the items that appear in both records.

6. 2. ADJUST BANKING STATEMENTS • Adjust the balance of the bank statements to the corrected balance. To do this, you must add deposits in transit, deduct outstanding checks, and add / deduct bank errors. • Deposits in transit are amounts that the company receives and records, but that the bank has not yet recorded. They must be added to the bank statement. • Pending checks are those that have been issued and posted to the company's cash account, but have not yet cleared the bank account. They must be deducted from the bank balance. This often happens when checks are written on the last days of the month. • Banking mistakes are mistakes made by the bank when creating the bank statement. Common mistakes include entering the wrong amount or missing an amount from the bank statement. Compare the cash account ledger with the bank statement to detect errors.

7. 3. SET THE CASH ACCOUNT • The next step is to adjust the cash balance in the trading account. • Adjust the cash balances in the business account by adding interest or deducting monthly charges and overdraft fees. • To do this, businesses must account for bank charges, bad checks, and accounting errors.

8. 4. COMPARE THE BALANCES • After adjusting the balances according to the bank and according to the books, the adjusted amounts should be the same. If they are still not the same, you will have to repeat the reconciliation process again. • Once the balances are equal, companies must prepare journal entries for adjustments to the book balance.

9. How often should you reconcile your bank account? • Ideally, you should reconcile your bank account each time you receive a statement from your bank. This is often done at the end of each month, weekly, and even at the end of each day by companies that have a large number of transactions. • Before the payment reconciliation app process, companies must ensure that they have recorded all transactions up to the end of their bank statement. Businesses using the online banking service can download bank statements for the regular reconciliation process instead of having to manually enter the information.

10. About Us • CAMS Recon DynamiX is a robust, fully automated software for seamless reconciliation of general ledgers, payments and transactions bringing operational efficiency and ease to the complex activity of payments and settlements. Errors are detected before they become problems, delays and attendant risks are driven down. Data translation, rules-based matching and investigative tools enable real-time analytics to monitor multi-level process status at enhanced speed, transparency and security. • Website - https://www.camsonline.com/Business/Reconciliations-Recondynamix