PKF International
PKF Rutherfords Ltd
	Accountants & business advisers- PKF Rutherfords Ltd, Palmerston North, New Zealand
Chartered Accountants & Business Advisers

How to do a bank reconciliation

Bank reconciliation keeps your bookkeeping accurate and can help lower your tax, alert you to fraud, and allow you to track costs. Bank reconciliation involves a comparison of your sales and expense records against the record your bank has. It can take a lot of time to do it manually, so you may want to consider using software. Most banks can send transaction data directly to accounting software like Xero through a secure online connection.

However if you do bank reconciliation, do it often. The longer you go without doing it, the longer it will take to catch up. It won't just be that you have more transactions to do, it will take longer per transaction, because you'll have a harder time recalling the details. So, schedule the time to do it every week or depending on the volume of your business transactions, even every day. And set up a system that makes it quick and easy to grab the records you need. Here's the steps you need to take to do this manually. Talk to us, and we can help you cut all the drudge out of this with Xero:

Bank reconciliation happens when you compare your record of sales and expenses against the record your bank has. It's how you verify your business accounting numbers. 
Get bank records
You need a list of transactions from the bank. You could get that from a statement, from online banking, or by having the bank send data straight to your accounting software. If you run a current account and a credit card account, you'll need both statements.
Get business records
Open your ledger of income and outgoings. This might be in a logbook, on a spreadsheet, or in an accounting software package.
Find your starting point
Find the last time the balance on your business books was the same as the balance in your bank account. Start the reconciliation from there.
Run through bank deposits
Make sure each deposit appears as income in your accounts. If something is missing, enter it. You'll need to figure out if it was a sale, interest, a refund, or something else.
Check the income on your books
Each entry should match a deposit on your bank statement. If something is missing, find out why. A customer payment might have bounced, for example.
Run through bank withdrawals
All bank withdrawals should be recorded in your books. This includes things like bank fees, which you might not have accounted for yet.
Check the expenses on your books
Each entry should match a withdrawal on your bank statement. If not, find out why. One of your payments may not have cleared yet, or maybe you paid using cash or a different account.
End balance
After you've checked all the deposits and withdrawals, your business bank balance should match the totals in your business accounts. This will be the starting point for your next reconciliation.

For a step-by-step from Xero, click here. Or give us a call. We can help make this easy.

Using our site

PKF Sites

         

PKF Rutherfords Copyright 2009 | Sitemap | Legal | Contact Us | Websites for accountants by Wolters Kluwer