Bank reconciliation sounds like a scary accounting procedure but it’s really quite straightforward. Sage Technical Writer Andy Rickeard explains what it involves in Sage 50 and Sage Instant Accounts.
What is bank reconciliation?
Reconciling your bank account is a simple process, it’s just a check to make sure that the transactions on your bank statement match the transactions entered in your software.
Why should I do it?
There are three big benefits of reconciling your accounts regularly:
- Accounting accuracy – Checking your transactions against your bank statement ensures that you’ve entered everything accurately into your accounts.
- Security – Working through your statement helps to identify if any transactions have gone through your bank that shouldn’t have. Stories of bank accounts being hacked and spurious payments being made are all too common, so reconciling is a great way to check this.
- Improving cash flow – Good cash flow is essential for your business, it’s therefore essential that you’re aware of the financial position of your company. By reconciling regularly you’ll understand the current balance of your bank account and which transactions are still to clear your account.
How do I do it?
In Sage Accounts you open the Bank module, select the bank account you’d like to reconcile and then click Reconcile.
You’re prompted for some initial information such as the end balance on your statement and details of any interest or charges in the period.
You can then start to select the transactions in your software that appear on your statement.
Once you’ve completed your reconciliation, you can save a copy to view at a later date.
How often do I need to reconcile?
Traditionally reconciliation was a monthly task, because it was associated with receiving your bank statement in the post. Most businesses bank online now with instant access to statement information so you have more control over how frequently you want to reconcile. It’s up to you, but if you process large numbers of bank transactions a weekly reconciliation may be more appropriate.
Where do I go if I need more help?
Visit the help centre – We’ve created a Bank Reconciliation area in the Help Centre that’s designed to guide you through the process. The centre features simple steps, videos and troubleshooting tips in case things don’t go to plan.