It often comes to a new business owner’s surprise to learn how important bank reconciliations are for ensuring that the company’s financials are accurate. Conducting an accurate reconciliation with the bank’s records is important not only to catch items you may have missed recording, but also to catch errors that the bank may have made. It may seem implausible that a bank could make a mistake, but it is more common than you might think.
There are several reasons why bank reconciliations should be done in a timely manner. For example, if you have made a deposit that ended up in someone else’s account, that is definitely something you need to catch as early as possible. Banks impose time limits for rectifying a mistake. Depending on your bank’s policy, you could have anywhere from 30 to 90 days to report an error and up to just 60 days regarding electronic fund transfers. Some errors provide for more time, such as realizing a check was fraudulently endorsed.
It is important to note that in the case of a bank error that was in your favor, the bank has much more time to get their money back and can do so without even contacting you. If you haven’t left enough money in the account because you didn’t know about the issue, the bank could charge you overdraft fees. If you do regular bank reconciliations, you’ll know about the error and be able to act accordingly.
At Proctor & Assocs., we recommend having us handle your bank reconciliations to ensure they are performed accurately. If we determine there is an error, we will advise you on how to correct it. Bank reconciliations are a part of our accounting & bookkeeping services as a measure to ensure your financial statements are accurate. Reach out today to learn more about our services for your Charlotte, North Carolina business.