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However, anything that affects the G/L such as unexpected deposits, interest income, or service fees will need to be recorded. The final step in the bank reconciliation process is to record journal entries to complete the balancing process. The easiest way to find these adjustments when completing a bank reconciliation is to look at the bank fees. You’ll also want to look at any miscellaneous deposits that haven’t been accounted for. Once you locate these items, you’ll need to adjust your G/L balance to reflect them.
Why Is Payment Reconciliation Important?
You will be able to reduce human manual error, speed up the process and store data in a centralised location with afinance automation tool like SolveXia. Having an accurate view of your business’ finances is an integral part of making the right business decisions. Finance reconciliation is just one process that requires timely completion. Whether your business has few or many transactions in any given month, you can rely onautomation toolsto help accurately reconcile accounts quickly.
Bank charges are service charges and fees deducted for the bank’s processing of the business’ checking account activity. This can include monthly charges or charges from overdrawing your account. If you’ve earned any interest on your bank account balance, they must be added to the cash account. Reconciliation ensures that accounting records are accurate, by detecting bookkeeping errors and fraudulent transactions. The differences may sometimes be acceptable due to the timing of payments and deposits, but any unexplained differences may point to potential theft or misuse of funds.
What Is Payment Reconciliation?
The cash used to make the purchases would be recorded as a credit in the cash account and a debit to the asset account. When a business receives an invoice, it credits the amount cash reconciliation of the invoice to accounts payable and debits an expense for the same amount. When the company pays the bill, it debits accounts payable and credits the cash account.
These items are typically service fees, overdraft fees, and interest income. You’ll need to account for these fees in your G/L in order to complete the reconciliation process. Your bank reconciliation form can be as simple or as detailed as you like.