It is a really bad habit not to have bank reconciliation by small business owners. Bank reconciliation is very important for businesses to prevent fraud. It is also used to detect errors in the system. Small businesses need to do bank reconciliation to verify the cash flow. If you are a newbie in bank reconciliation, then accounting firms in Dubai can help you with these key tasks.
Business owners may think of the preparation of bank reconciliation statements as a normal task or some time-consuming process. However, performing a bank reconciliation is way more important than that. In this blog, we will discuss what bank reconciliation is and how you can prepare it. If you are a small business owner or an entrepreneur, then do not skip this blog. Keep reading to know more about the valuable insights.
What Is Bank Reconciliation?
If you don’t know about the bank reconciliation for your company. Let us explain it to you. Bank reconciliation is a critical accounting process where the business matches its bank statements with the transactions recorded in the financial records. The businesses can confirm the payment by reconciling bank statements with financial statements. Businesses can ensure that the cash collections have been deposited into a bank account. It is the best way to know that the payments have been processed.
A bank reconciliation statement outlines the withdrawals and deposits that affect a bank account for a period. Bank reconciliation statements are beneficial to businesses as they help them to reduce errors in bookkeeping or transactions. Businesses use these powerful tools to detect any fraud. Accounting firms in Dubai can help you with more details about the bank reconciliation statements.
Why Must You Do Bank Reconciliation?
A bank reconciliation statement helps you to identify the differences between the entries in your accounting and bookkeeping system. It explains the transactions outlined in your bank statement. Here are some reasons why you should do bank reconciliation regularly.
- You can point out errors such as missed payments, double payment calculation errors, etc.
- Bank reconciliation makes it easy to track the bank fees and penalties in the accounting books.
- Businesses can detect any fraud in transactions or theft.
- It will help you to know your company’s exact cash flow position.
- If you do the reconciliation on a daily basis, then you can identify the subscriptions. These subscriptions are meant to be canceled. You will find out any credit card fees you are being charged.
- You can also keep track of accounts receivable and payable of your business.
- It also helps businesses to identify possible delays in check clearance.
How to Prepare a Bank Reconciliation Statement?
Finance and accounting teams in an organization usually execute the following steps to prepare a bank reconciliation statement:
- Compare the bank statement with the general ledger.
- After that, you must adjust the general ledger.
- Next, you can adjust the cash balance.
- Finally, you can compare the balance and add journal entries if required.
What are the common issues with Bank Reconciliations?
Businesses may encounter some challenges while doing bank reconciliations. If the reconciliation is regular, it will be easier to address problems when they arise. It happens because the required information takes time to recover. Moreover, the possibility of a mismatch emerges when transactions are not recorded properly. And when bank fees are applied, you might need to find the documents. You can easily navigate these challenges by hiring the best accounting firms in Dubai, UAE.
Consult with the best accounting firms in Dubai, UAE
You can make improved business decisions by doing regular bank reconciliations. These bank reconciliation statements can be used to omissions, find errors, and detect fraud. However, small businesses with fewer resources can hire the best accounting firms in Dubai, such as ebs to perform efficiently. Reconciliation.
Outsourcing accounting services in Dubai is the best solution for businesses. As they can avail themselves of a wide range of services. We provide many services, such as bookkeeping, VAT services, accounting services, CFO services, and many more. We have a team of professionals who will handle your business activities better.
Our clients are always satisfied with our services. We try to help businesses to improve their accounting management. You can contact us without any worry and get peace of mind. ebs is accessible to help you in finding out about bookkeeping in the UAE. ebs likewise offer services, for example, accounting and bookkeeping services, VAT services, Auditing, Due Diligence audit services, and many more.
Feel free to contact us with any additional inquiries or requests for accounting services. A free discussion will be given to you by our specialists, who will answer your request immediately.
FAQ’s
What is bank reconciliation?
Bank reconciliation is a critical accounting process where the business matches its bank statements with the transactions recorded in the financial records.
Why is bank reconciliation important for small businesses?
Bank reconciliation statements are beneficial to businesses as they help them to reduce errors in bookkeeping or transactions. Bank reconciliation makes it easy to track the bank fees and penalties in the accounting books.
How often should I reconcile my bank accounts?
It is best to reconcile your bank accounts at least once a month. If you have high transactions and more frequent, then you will want to reconcile more often.
How do I reconcile my bank accounts?
To reconcile your bank accounts, you have to gather bank statements and your accounting records. You can compare the two sets of records to identify any discrepancies. Investigate it and make adjustments. Once the two sets of records match, you have successfully reconciled your bank accounts.