Reconciliation 101: How to Reconcile Your Business Accounts

Yawning, you blink, the sun’s radiance too bright for your drowsy eyes. 

Wait. Light?? Bright light?? This isn’t right. You are usually up well before the big star peeks over the horizon. 

Did your alarm not go off?? Were you too entranced in the land of Nod to hear the mundane buzz?? 

Frantic, you grab your phone and see that your very important meeting is starting in less than an hour.

Your commute alone will take 30 of those precious minutes. 

No time to waste, you dress in a flash.

You walk into the meeting room, and, since you skipped your normal stop for your favorite brew, you sigh in relief as you are right on time. Since you are not afforded the luxury of time to review your notes, you give yourself an internal pat on the back for preparing for this presentation so well yesterday.

Smiling, you prepare to give the presentation that you just know will bring new clients and enhance your business. 

Then, you look down… and see your blunder.  

Fortunately you did remember pants, (today is not the day you will experience the dreaded scenario that has haunted many of our dreams at some point- phew!) but your shoes definitely do not match. In fact, they aren’t even the same color. 

Skirting behind the table, you make a mental note not to venture too far past it so no one will notice your incongruous footwear. 

What is reconciliation and why should I care?

Reconciliation is a fancy word for checking to make sure everything matches. Failing to reconcile your accounts could result in errors in reporting which is far worse than just having to skip your morning brew!

While I may not have the perfect solution for making sure you don’t hit snooze too many times, I can help you avoid inconsistencies in your accounts. 

In fact, reconciliation of accounts is so paramount, it is THE #1 service that bookkeepers offer and DIY blogs address!

It is the staple of every end-of-month routine, providing assurance that all your income and expenses for that month are accounted for. (Remember, any business expenses bought with personal funds should be included as well!)

What all needs to be reconciled?

The act of reconciling will look a little different depending on what you are checking. 

For example, when reconciling your bank account, you’ll want to make sure every transaction is accounted for and matches the monthly statement. 

If you are reconciling your invoices, you are confirming each one flipped over from your CRM and the payments still match. These are also commonly referred to as accounts receivables. 

Since the bulk of your income and expense transactions reside in your bank accounts, these are the MOST important to reconcile. This would include any PayPal and Stripe accounts as well. Reconciling these at the end of every month ensures that each transaction is appearing on the reports that drive your business. 

Lastly, liability accounts (credit cards and loans) should be reconciled regularly. At a minimum, reconcile these accounts yearly to make sure all your loan interest (that’s a business expense!) is accounted for. 

Need help?

If you have not already started compiling your finances monthly, let me help make that a bit less daunting for you by subscribing to one of my monthly (or even quarterly!) bookkeeping packages. 

You can sleep well knowing your accounts will always coincide! (Waking up on time for that important meeting is still on you though!)

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