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Improve Your Business’s Cash Management Through Financial Statement Reconciliation

Posted by Concannon Miller on Thu, Jan 26, 2017

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stockfresh_215083_examine-the-dollar_sizeM.jpgThe start of a new year is the prime time for resolutions, including financial resolutions.

If you’re a business owner or finance officer, those resolutions should include reconciliation of your bank and financial statements. Closing out your 2016 bank statements and starting with a fresh accurate bank statement in 2017 is one step in ensuring you have solid cash management practices in place.

So what is important to reconcile and how often should I reconcile? All bank and financial statements should be reconciled at a minimum on a monthly basis, and daily checks are even better. The bank statement should reconcile with your general ledger accounts and your bank balance should match your company’s books. Here are a few best practices to make a “must do”:

  • New Call-to-actionDaily match your cash deposits made by your business with the cash receipts shown on your bank statement. Are your employees depositing cash on the proper schedule? Do the amounts recorded as deposited match what was actually deposited?
  • Daily match your cashless deposits. Are you getting deposits from all of your card companies through your merchant services provider? Do the cashless deposits from the merchant services provider match what was recorded on your ISP? Have your merchant services fees changed over the course of the month or the year? If so, why?
  • Daily match your check/disbursements/payments activity. Do your checks paid match the dollar amount and payee name? Do your payments match your invoices? Do you have any unauthorized payments via check or ACH on your account?
  • Monthly monitor your merchant “chargebacks.” With the new rules on chargebacks for merchants who do not offer the “chip-enable terminals,” you could have a great deal more chargeback activity—especially around the holidays.

Timeframes to report bank errors, fraud, and billing errors

  • Credit Card Billing Errors (Regulation Z): Must provide written notice no later than 60 days after the lender sends you the first billing statement reflecting the error.
  • Electronic Transactions on Consumer Accounts (Regulation E): You have 60 days from the date of the statement to provide notice of an error.
  • Bank Account Opening Agreements: Check the terms of your business accounts with your bank - not all banks have the same terms for losses, fraud, and errors. Ask your banker to outline your dispute rights and timeframes.
  • Credit Card Chargebacks: Visa, MC, Amex, and Discover all have different rules and timeframes for merchants to address chargebacks. Be sure to closely follow the timeframes for each card issuer if you are experiencing credit card charge back issues.

It is never too late to begin using smart cash management practices. If you have never reconciled, start today. If you find past errors that are outside the legal timeframes to dispute, you may still want to bring them to your bank’s attention to see what can be done and to alert them of potential fraudulent activity. Start your new year with a clean set of records and make it your resolution to reconcile at least once a month in 2017.

Sound overwhelming? No worries – there are several solution available to assist you in reconciling bank accounts through bank products, Quickbooks and other reputable software firms that your office staff can use to help with this task. Another best practice is to outsource reconciliation of your bank accounts to your CPA.

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Topics: Business consulting

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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