Saturday, February 3, 2024
HomeBankWhy Is It Important to Reconcile Your Bank Statements?

Why Is It Important to Reconcile Your Bank Statements?

If you’re unfamiliar with the process, you’re probably wondering how to do bank reconciliation. Although it isn’t difficult, it can take time, especially in the beginning. Follow these four steps to start the reconciliation process.

1. Choose your method

First, decide how you will reconcile your statements. There are several ways to keep track of your incoming and outgoing payments so you can compare them to your bank statements. These include the following.

  • Checkbook ledger
  • Notebook or spreadsheet
  • Accounting software
  • Budgeting apps

If you don’t track your expenses using any of these methods, start doing so ASAP. It’s never too late to take control of your finances and be more aware of where you’re spending money.

2. Compare your deposits

Once you know which method to use, compare the deposits in your records to those in your bank statement. You can do this by checking that all deposits on your account statement are included in your documents and adding and reconciling items as you go.

Similarly, check to ensure all deposits on your tracker are on your bank statement. If any are missing, follow up with the person or entity who deposited the money to find out why it didn’t make it to your account.

The most common reason a deposit might not have made it onto your bank statement is that it cleared after the statement cutoff date. Look at your account using your bank’s mobile app to ensure the deposit arrives; if not, contact the bank to determine the issue.

3. Compare withdrawals

After you’ve checked your deposits, it’s time to compare withdrawals between your finance tracker and your bank statement. Set your statement and tracker side by side and check that all the withdrawals listed on your statement are reflected on your records and vice versa.

If you notice a withdrawal on your bank statement that doesn’t appear on your records, look to see what the withdrawal was for. You likely made a purchase and forgot to add it to your ledger. But sometimes, you might find signs of check fraud or other unauthorized withdrawals or purchases that need further investigation. Contact your bank directly if you notice anything like this.

Similarly, if you find that a withdrawal appears on your tracker but not on your bank statement, investigate why. It’s possible a check didn’t clear before the statement cutoff date, or the recipient hasn’t cashed it yet.

4. Look for adjustments

Bank account adjustments may not appear on your record, so you’ll want to add them to ensure your tracker is accurate. Some examples of bank adjustments include fees and interest payments.

For example, your account might charge a monthly maintenance fee, or you may have overdrawn your account and been charged an overdraft fee. If your account can earn interest, you may notice deposits for the interest you earned over the statement period.



Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments