The Importance of Reconciling Daily

June 12, 2018

The primary function of reconciling is making sure the bank’s records match your book’s cash transaction records.  Just keeping good records isn’t enough. By reconciling daily we see charges as they occur, so we know the up-to-date current balance. If a check clears for the wrong amount, or a check clears for the second time (which is increasingly more common with ATM/mobile deposits), it could throw off a business’ account balance and could cause other outstanding items to be returned

unpaid.  Knowing your current balance will help prevent bounced checks, overdraft fees and improve liquidity management. Daily reconciliation is also the best defense against losses caused by unauthorized transactions.

                                                                                                                        

We can’t talk about banking today without mentioning fraud. The 2018 Identity Fraud Study by Javelin Strategy & Research revealed that the number of identity fraud victims increased by eight percent in 2017, rising to 16.7 million US consumers. The potential for fraud alone is reason enough to monitor bank accounts daily. According to Regulation E’s Consumer Liability for Unauthorized Transfers, waiting even two business days to notify your bank of certain fraudulent activity can multiply your potential loss tenfold.  In the event an account becomes jeopardized, it is vital to identify discrepancies immediately to prevent losses and to ensure continuity for your business.

 

If you’re waiting until the end of the month to reconcile your bank accounts, you’re waiting too long. In today’s fast-paced global environment, far too much can happen in a 24 hour period not to monitor your accounts daily. This probably sounds like a daunting task with your already busy schedule. Why not let LBSI take a small amount of time reconciling your bank accounts daily, to prevent you from spending a considerable amount of your time and frustration if/when something does go wrong.

 

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June 12, 2018

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