Reconciliation is the process of comparing two sets of records in order to ensure that the figures and data agrees and accurate. It determines that the money leaving the account is same as the amount spent to ensure that the values remain balanced at the end of recording.
To check the accuracy of bookkeeping one of the most efficient and commonly used tools is bank reconciliation .Bank reconciliation is a process of ensuring done by a company to make sure that the company’ records (balance sheet, check register and general ledger account etc) are correct and the record of bank is also correct. Bank reconciliation begins with the company noting the balance per bank statement and making notations about the balance. An example is that the amount written on the bank statement is not the same as that present in the company’s record. The process of bank reconciliation should be completed at regular intervals to detect any type of fraud and use the information to improve the control over the receipt and payment of cash. At a minimum bank reconciliation should be done after end of each month, when bank statement is send to the company containing information about transactions done during the month, bank’s beginning cash balance and ending cash balance. If bank reconciliation can be done every day this is even better as it helps in spotting and correcting problems immediately. A daily reconciliation would also highlight any automated clearing house (ACH) debits which have not been authorized by the company and use of these (ACH) debits to withdraw funds from account can be prevented by installing debits blocks on the account.
In most of the cases the ending cash balance of the bank and that of the company would never be identical due to the fact that there are many deposits and payments transactions all the time, as well as service fees of the bank (for deposits, accepting checks), penalties for draft and insufficient fund deposits which have not been recorded by the company. The essential bank reconciliation process is to begin with ending cash balance of the banks, add all the deposit in transit from company to the bank and subtracts check which have not yet been cleared from the bank.
PayPal allows companies and individuals to transfer fund electronically. Every transaction, every payment which a company or an individual makes is recorded with detailed transaction information. PayPal has many reports to reconcile with the account and for large companies settlement report and transaction details are popular options for reconciliation. It is important to reconcile your PayPal account to make sure that the both the company and the account have same records. Keeping information about the balance of the account and amount being spent on daily basis ensures the company providing the services imposes no fraud or extra illegal charges.
IMPORTANCE OF RECONCILIATION:
The bank and PayPal reconciliation are both very important aspects of bookkeeping. It allows the companies and business to keep a record of their financial activities and make sure that their record is same as that of the bank or the PayPal account. It ensures that the financial institutions have not made any errors which would affect their account and help in assessing whether companies are spending too much on banking and credit cards or not. Reconciliation is important for business to ensure that their accounts are safe from fraud and for preventing balance sheet errors. This ensures that the records reflect the current position of profit and loss and assets and liabilities of the business.
OUTSOURCING BANK AND PAYPAL RECONCILIATION:
Most companies and business fail to recon ciliate their bank and PayPal accounts and make mistakes, which affect their companies resulting in loss. They can take help regarding bank and PayPal reconciliation from other experts outside of their enterprise to ensure proper handling of these matters. This is where we “outsourced bookkeeping” come up in providing our services for bank and PayPal reconciliation to keep the business up to date by checking accounts and credit cards every month. By reconciliation of accounts from “outsourced bookkeeping” businesses and companies will have the following benefits:
- Identification of lost deposits, checks and unauthorized wire transactions.
- Detection and prevention of unjust bank charges.
- Knowledge about the financial status of the company.
- Effective management of cash which not only saves money but also makes more money for company.
- Timely reconciling and reporting to bank about unauthorized charges will ensure that the bank cancels these charges which save you from paying extra.
All these services provided by our organization ensures that the owners of companies and business can rest peacefully knowing that their accounts are in safe hands and being reconciled regularly leaving no chance of loss resulting in prosper of their company or business.