Reconciliation is an essential accounting process that ensures two different financial records are successfully matched up. That is especially essential to make certain that your accounts are all so as. When your business is managing many transactions and numbers, it’s smooth for small errors to start piling up and causing inconsistencies.
If there are differences between records that are unexpected, it’s important to get to the bottom of the problem and either give an explanation for the discrepancy or modify it. When operating the accounting of a business, it’s without a doubt essential to recognize how to reconcile QuickBooks online, one of the most extensively used online accounting equipment in the world.
Also Read: Merge two accounts in QuickBooks
What is Reconciliation?
If you’re within the world of business management or accounting, chances are you’ve heard of reconciliation. But, it’s a typical accounting process that you could now not fully apprehend or prioritize. This is commonly executed at the end of a fiscal period, and it double-checks that the amount of cash spent flawlessly suits what your debts are actually left with at the end of the duration.
Learn how to undo and delete the reconciliation in QuickBooks.
Even a small error left unchecked could reason blinder problems to your business’s statements, delays with invoicing or bills, and accruing accounting issues in the future. It also offers an essential verification that there may be no fraud or unsavory activities going on.
There are many different types of accounts within a business. It’s important to perform reconciliation of the major accounts, such as:
- Accounts receivable and accounts payable
- Fixed assets
- Cash
- Investments
- Prepaid expenses
How to Reconcile on QuickBooks?
Reconciling on QuickBooks online is a clear and effective technique, permitting you to effectively reconcile your enterprise’s economic statistics and test for any significant discrepancies.
The step-by-step manual on how precisely you may do this is given below:
Step 1: Get Your Financial Statements
In order to reconcile on QuickBooks, you’ll first need to have your financial statements available. These days, most economic statements are sent out online. Make sure to have every declaration so as earlier than you start the procedure of reconciliation.
Step 2: Reconcile on QuickBooks Online
Once you’re ready to get began, select the gear within the top right of the QuickBooks online menu, and pick the reconcile choice in the menu. Now, it’s time to pick out the account which you wish to reconcile and input the relevant facts out of your financial declaration. This information will be:
- The date range
- Beginning balance
- Ending balance
Then click, start reconciling. Reconciling on QuickBooks is efficient because the software is capable of doing a lot of work for the results you want. However, it’s still important that you make certain you’re coming into all the right numbers and double-checking each result offered.
Step 3: Read Over the Reconciliation Report
After QuickBooks does the reconciliation, you’ll be offered a report chock full of statistics. Let’s pass over what you need to take note of in this file. On top, you will see a summary including the start and ending balances, payments, and deposits.
Then, you’ll see a complete breakdown of all transactions. Each transaction will show the date of the transaction, the date it became clear, the form of transaction, a reference number if relevant, the account, and the payee. On the right, you may see a green symbol that indicates whether the transaction was matched in the banking feed. You may additionally see sections for either payment or deposit, indicating the amount of the transaction.
Step 4: Match Payments
Now, together with your bank statement in hand, you can revise every transaction and make sure that everyone matches. When a transaction fits, you can check it off at the furthest right column in QuickBooks. Once everything has been checked off, you ought to ideally see 0$ within the top right corner where it says difference. Then, you can simply click on end now!
Afterward, you’ve got the option to view and store the reconciliation record in its totality. Reconciling in QuickBooks is that smooth, and it facilitates ensuring that you don’t omit a single transaction or allow anything to slip thru the cracks.
Why is Reconciliation Important?
It’s easy for accounting errors to take place, so reconciliation is important to backtrack over a fiscal period and ensure that all errors are accounted for and reconciled.
If an error can’t be well explained or reconciled, this may be a signal of deeper issues inside your business, whether it’s far disorganized approaches or fraudulent activity taking place. It’s easy to assume that these things won’t take place for you or your business, but the reality is that financial fraud is fairly common.
In fact, financial fraud has been proven to take place almost every 15 seconds in the United Kingdom. In U. S. A., millions of people and organizations fall suffer from it every year. As an accountant or a commercial enterprise owner, it’s your task to be proactive to be able to keep away from this hazard or word it as quickly as viable to decrease potential damages.
What to consider before you reconcile using QuickBooks Online
While connecting your bank account immediately to accounting software such as QuickBooks online makes it simpler to track and match transactions, you still need to complete the reconciliation process.
You may need to take into consideration when reconciling your accounts whether you’ve connected your bank accounts to the application or you’re just uploading your transactions electronically at month-end. Here are a few other things you may want to consider when using QuickBooks Online.
1. Your bank statement and your general ledger rarely match
While it reduces the amount of time you need to expend working on reconciling your accounts, the odds of your bank statement and your general ledger matching immediately is pretty slim. It’s not that there aren’t advantages to connecting your bank account to your software, but it doesn’t do all the work for you. The only time the two will likely match is if there’s no activity on the account.
2. Keep track of outstanding checks
If you pay your vendors or your employees with a check, you’ll need to keep track of those checks. Most importantly, you’ll need to know how many outstanding checks you have at the end of the month.
3. Always look for mistakes
It’s easy to assume that large financial institutions don’t make mistakes, but they do. A few years back, I had checks belonging to someone else clearing in my account for three months in a row. If I hadn’t looked at the checks that were clearing to match them with my transactions, chances are I never would have spotted them.
This is particularly true if you’re having difficulty reconciling the two balances. Always look to see if something cleared your account that just doesn’t belong there.
All the features you need for fast bank reconciliation
Reconciliation reports
When you finish reconciling accounts, QuickBooks automatically generates a reconciliation report. It summarizes the beginning and ending balances, and it lists which transactions were cleared and which were left uncleared when you reconciled. This report is useful if you have trouble reconciling the following month.
Easily identify discrepancies
Discrepancies happen. With QuickBooks, you won’t waste time spinning your wheels. There are several reports – such as the The Reconciliation Discrepancy Report, the Missing Checks Report, and the Transaction Detail Report – that can help you identify discrepancies quickly.
Work with your accountant
Give your accountant direct access to your books so she can find the reports and information she needs when questions arise. Create a separate login for your accountant to make it easy for her to work with you. You can exchange messages and share documents directly inside QuickBooks, too.
Read More: How to become certified in digital marketing in 2022
