Accounting is a crucial undertaking for any company, including your engineering business, supported by efficient purchasing software. Lack of proper accounting skills could expose you to the risk of fraud or unauthorized spending, which can detrimentally affect your startup's progress. Consequently, it becomes imperative to generate reconciliation reports with regularity to ensure accurate financial management.
What is a Reconciliation Report?
A reconciliation report is a record that offers a way to settle discrepancies between different types of receipts or expenditures connected to a specific work. The differences creep up during reconciliation, a process that verifies the actual money spent versus the amount of money shown leaving an account at the end of the financial period.
Preparing reconciliation reports is important for any business, as it helps you check for fraudulent activity within the company and eliminate financial statement errors. Humans and banks are prone to mistakes, and reconciling credit card and bank account transactions help deal with the errors, if any.
Many companies do their reconciliation reports every month or quarterly, making sure that the accounting books are balanced.
Why should you reconcile your accounts?
Bank reconciliation is an important activity for any business, as it helps you manage your cash flow and ensure that the recorded bank balance and your business balance match up. The reconciliation report also helps keep track of accurate postings on the general ledger. Here are some reasons you should do bank reconciliation.
- Verify the financial statements' accuracy. By preparing a reconciliation report, you can be sure that your financial statements match the bank statements. While it is rare for banks to make errors, it doesn't mean they cannot mistake something, and bank reconciliation helps uncover the errors.
- Pinpoint fraud. In many cases of fraud that went unnoticed, it was because the bank account wasn't reconciled. Reconciliation reports help uncover signs of fraud. Were there any missing deposits? Are there any checks that were duplicated or changed? Are there any unauthorized transactions out of the account? Does the balance match the expenditure? All this will come to the fore with bank reconciliation.
- Accurate data entry. The reconciliation reports help you identify any discrepancies like duplicate entries, entering wrong amounts, and other data entry mistakes. With this, you can track every transaction in and out of the bank account while keeping an eye on the balance.
- Get rid of theft. When dealing with employees in your company, some may get greedy and steal from the business. It could be during the procurement process or any other expenditure. A reconciliation report curbs that. Going through the bank statements and matching the balance will stop employees and others from stealing from the company.
As the company director, you already have a lot to deal with, from making the much-needed robot prototype to going through the next submarine design or even handling the spare parts procurement. As such, you might be overwhelmed by going through the financials, and that’s where our automated bank reconciliation platform comes in.
Why should you use reconciliation software?
Efficient and fully automated
Preparing a reconciliation report takes a lot of time, especially when you do it manually. There is a lot of data entry that takes a while to understand, and using our software can quickly reduce auditing risks while giving your team more time to handle other tasks.
The beauty of the platform is that it saves all the data history and bank reconciliation reports. You can track how much something cost in the past, which will help you budget for the future. The data will also help you fully comply with the audits.
Fewer errors and enhanced internal control
Manual data input is prone to errors, ultimately affecting the balance at the end of the fiscal period. Automating the reconciliation process helps eliminate the mistakes in the final report. The platform also allows the accounting department to track how the program works, and in case of any unusual activity, you are promptly notified.
With our software at Control Hub, it’s easy to delegate bank reconciliation duties to anyone in the accounting department. Everyone knows what they need to do, and whenever a reconciliation requires approval, it’s automatically passed on to the relevant person.
Making reconciliation reports is essential for the success of any business. You need to know the operating balance and the balance left after expenses; they must match the bank balance. The report gives you the fiscal picture of your company, ensuring that you are not overspending and there is no ongoing fraud. The best way to get accurate reports is by automating the accounting system, and you can do that using our platform at Control Hub, where you can reconcile all the bank statements without a fuss.