A week ago, I was at a customer to enable them to close the second quarter of the year. They do the majority of their own data entry and account reconciliations and I review the work and answer questions. The proprietor had an inquiry concerning how to enter a May transaction and thus had not reconciled the June business reviewing account statements. In anticipation of our meeting, she began assembling all the bank statements and saw something peculiar: day by day installments in June to a Capital One card. The issue is this organization didn’t have a Capital One account! The fraud totaled more than $100,000 stolen from their business checking account for more than 35 days. Nobody saw, on the grounds that neither one of the owners looks at the online banking all the time. Besides, this is a QuickBooks Desktop file, so there was no day by day bank feed to audit. Obviously, the fraud was accounted for immediately, however, who realizes to what extent it will take before the bank restores the funds to their account.   It raises the question: Can any of your customers bear to take a $100K hit to cash on hand? What could this business have done to get the fraudulent activity in an all the timelier way? The appropriate response is: perform a week by week, interim bank rec!  

What is an Interim Bank Reconciliation?

Bank reconciliations are a key accounting function. I’ve had customers get some information about the significance of statement reconciliation. A week ago, while meeting a potential customer, the entrepreneur told me, “I post all my own transactions, however, I don’t have to do a bank rec and I would prefer not to pay another person to do it either.” This is misguided reasoning. Reconciling your checking, investment funds, credit card and loan/LOC accounts is the best way to guarantee that every one of the transactions on the statements is in your books too. You may answer, “Well I use QBO (or Xero) and every one of the exchanges comes in by means of bank feed, so obviously they are all in my books.” If in this way, your answer would not be right. Now and again a bank feed has what I call a “hiccough” and a transaction, or a whole day’s worth of transactions gets duplicated or even skipped. If that happens, your customer’s expenses will be either exaggerated or understated. You get the duplicate or missing transactions when you perform a bank statement reconciliation. Playing out a bank rec likewise averts fraud. Not simply in the glaring case at the beginning of this post, yet in addition by investigating the monthly bank statement. Numerous entrepreneurs never at any point take a look at that point! When auditing the statements, make certain to eyeball the check images on the last pages of the statement. Ensure every one of those images is genuine – a genuine check from your customer’s business to an authentic seller and not crafted by an internal or external fraudster.

Instructions to Perform an Interim Bank Reconciliation

To play out an interim bank rec, login to online banking once per week, on a Monday or a Friday. Go to the transactions and enter the balance as of that day as the ending balance on the bank rec screen. At that point, separate all the recent transactions in the document that matches those in the online banking – simply like you would do if you had the monthly statement in your grasp.   In the event that you see any errors, you can look into them (or report them as fraud) inside the days of their event. At the point when your work is finished, click “Save for Later” or the equivalent. Then do it once more, a week from now. Obviously, when the final statement arrives you will finish the bank rec and when everything matches, click “Finish now.” Voila! You are totally over every one of the transactions going all through the account on a weekly basis. In conclusion, playing out an interim bank rec on at least a weekly basis not just guarantees every one of the transactions which have occurred in real life are entered into your accounting software, however, it might likewise get fraudulent transactions in a considerably more convenient way, subsequently saving you cash, time and stress.
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