In large companies, there’s usually an accountant balancing the books and checking for discrepancies, but many small business owners manage their own bookkeeping. It can be a lot to keep track of, coupled with all of the other day-to-day responsibilities of running a business, so some owners let monthly bank reconciliations fall by the wayside. This is usually because they don’t know the benefits that taking the time to balance the books at month-end can have. 

In a nutshell, bank reconciliation statements summarize all of your transactions and business activity, allowing you to ensure that all payments received have been processed and all funds received have been deposited into the bank. 

A reconciliation statement can help identify any differences between your bank balance and your book balance, easily locating necessary adjustments or corrections, circumventing any potential fraud and ensuring that your books balance at the end of your fiscal year without having to review months of transaction records.

Doing monthly reconciliations is an accounting best practice that every business should be doing and can help significantly with cash flow. If you don’t reconcile monthly, you could be missing payments or overages on invoices that could end up being costly in the long term.

 

Use Zoho Books to simplify your monthly reconciliations

The right technology can streamline your accounting procedures. Zoho Books is easy-to-use, cloud-based accounting software designed to help any type of business to manage its finances and stay on top of cash flow. Features such as invoicing, expense tracking, inventory management, and reconciliations are available anywhere, from any device and Zoho Books easily integrates with all of the most popular payment processors including Paypal, Stripe, and Square.

Using the “Payments” module in Zoho Books to apply all of your payments cuts down on accounting errors because rather than simply marking an invoice as paid, you enter the actual amount and the invoice it should be applied to. However, you still want to ensure that what is in your bank account and what is in Zoho Books matches up.  If it doesn’t, you may have a data entry error or missing payment. This is where monthly reconciliations come in.

In Zoho Books, you can easily reconcile your accounts to ensure that the transactions in your bank account coincide with transactions you’ve created in Zoho Books. You can even choose the period for which you would like to reconcile an account, by setting a particular reporting period or the end of every month.

Using the Banking module in Zoho Books to complete your monthly reconciliations couldn’t be simpler.  Before starting, ensure that your opening balance is correct because it cannot be edited once the transactions have been reconciled.

  • Go to the Banking module in the left sidebar.
  • Select the account you would like to reconcile.
  • Choose the “Settings” dropdown menu in the top right corner of the page. 
  • Select “Reconcile Account”.
  • Enter the Start Date and End date of the period you would like to reconcile. 
  • Enter the Closing Balance of your bank account.
  • Click “Start Reconciliation”.
  • Select the transactions you would like to reconcile. 
  • You can add or edit transactions as needed.
  • Ensure that the Closing Balance and Cleared Amount are the same and the difference is zero. If needed, you can edit the Closing Balance.
  • After you finish reconciling your account, click “Reconcile” to finish the process.
  • After a successful reconciliation, the status of your reconciliation process window will say “Reconciled”.
  • Attach a PDF copy of the bank statement to the completed reconciliation for future reference; you can do so using the paperclip icon. 

Using Zoho Books to simplify monthly reconciliations and all of your other accounting processes can help you implement best practices that save your small business time and money.

You do so much work to run your business. Don’t let your hard-earned money fall through the cracks by not doing monthly reconciliations. Zoho Books makes them simple. 

 

ion8 has the team to help and is a Zoho Advanced Partner with a team of experienced Zoho consultants and developers ready to integrate Zoho Books with your existing payment services. To find out more about how ion8 can streamline your accounting, contact us today.