This component is a precise and accurate accounting system without which any company will be beset with problems, whatever may be the level of growth or performance. It is not to assume that accounting is a separate entity. The point is that having updated accounting systems and access to reports whenever required enhances the decision making process and enables owners to instantly cash in on opportunities that do not arrive every day.

To achieve this level of consistency, focus should be account reconciliation on a monthly basis. As will be seen in some detail, there are many benefits to it. It is also a fact that most companies opt for Accounts Reconciliation Services as it ensures quick and accurate implementation of this process.

The importance of account reconciliation can be further understood if the accounting heads in question are analyzed - 

·         Credit Cards Reconciliation – More often than not, the perceived accessible limit is not what is actually available. This is because a purchase made by you at the end of the billing cycle might not be reflected in the statement received by you. Conversely, a credit made by you might have missed the cutoff point. If you take the statement received by you, subtract the purchases made from the limit available and add the deposits made after the bill date, you get a true picture of the state of your finances. It will save you the embarrassment of over-drawing your limit. Rather than having your accountants doing it, entrust it to an outsourcing firm along with the company’s reconciliation activity. This is especially useful for corporate cards where a whole lot of different cards have to be simultaneously monitored. 

·         Bank Reconciliation – The importance of this exercise has already been discussed in some detail. There is no doubt that a company’s fortunes, both in eliminating fraudulent transactions and knowing the true state of finances largely depends on the bank reconciliation. However, keeping track of hundreds of vendor payments and receipts from creditors is a very complex process. Even though a bank statement is received once a month and the reconciliation process can start only then, outsourced reconciliation services keep a close track of all transactions throughout the period so that monthly reconciliation is completed without delay. 

The importance of monthly Bank Reconciliation is further fortified if the positives are evaluated–

·         Arriving at the true cash position – Since there will always be a time gap between what is entered in the cash books of the company and what is posted in your bank account, there will be a constant difference between the two. Only when the two are balanced while the correct picture emerge and give an exact position of the cash reserves of the company which can be utilized for expansion or product launches. This is also very important when annual balance sheet is prepared as the state of finances has to be placed before stakeholders or financial institutions.

·         Helping to eliminate fraudulent transactions – In this case, accounts reconciliation services play a major part by implementing a speedy settlement process. When external outsourced agencies and banks are only involved in the reconciliation process, any attempt by company insiders to push through fraudulent transactions is immediately negated. Further, any mistakes made in the course of business will be rectified at the end of the month without delay. Small discrepancies if left un-rectified for long can blow out of proportions. 

·         Balancing all heads of accounts – Most account heads in any organization are interdependent on each other. If you have purchased software, you must have issued a check to the vendor by debiting a purchase account and crediting cash head. The bank account is also debited when the check is presented for payment. By reconciling bank balances you are sure that both the two heads are balanced under the double entry system of bookkeeping. This can be true for other accounts as well.

All these pointers prove the importance of account reconciliation on a monthly basis.

For top of the line accounts reconciliation services, get in touch with Cogneesol. We provide a speedy reconciliation process. Simply upload your invoices and vouchers to us and we’ll update your system so that accounts reconciliation is carried out without a hitch within set time frames. Contact us at info@cogneesol.com.

Finance and Accounting Services