Every successful business is based on proper financial management. Bank reconciliation- the process of matching your records with your accounting records is one of the basic accounting jobs that would guarantee this accuracy. A reliable accounting software, Zoho Books, boasts of smart automation that simplifies this process so that you can now keep your books in perfect order without any hassle.
The blog will be a detailed step-by-step instructional guide on the process of reconciling bank statements within Zoho Books, with added tips to help make the process more efficient and more precise.
Knowledge Bank Reconciliation and Importance
Bank reconciliation refers to the procedure that involves comparing the transactions that are reported in your bank statement and those that are in your accounting program. This is done to confirm that all the payments, deposit fees, and charges recorded on the two books are correct. The significance of this exercise consists of the identification of discrepancies in the form of unaccounted bank fees, unaccounted transactions, or data entry mistakes.
Good Reconciliation does not only result in fiscal transparency, but also gives one a good cash flow image so that the business can avert overdrafts, identify fraud, and be confident to audit or file tax returns.
How to Reconcile Bank Statements in Zoho Books
Check Your Bank Account Module.
After successfully logging in to Zoho Books, go to the banking module on the left sidebar. Choose the bank account that you want to reconcile.
Open Reconciliation Window
On the top right side, there is a gear icon; when you open it, you have the option to select ‘Reconcile Account’. Then, press the button Initiate Reconciliation, and the reconciliation interface will be opened.
Reconciliation Period and Closing Balance.
Select the start date of the statement period and the end date of the statement period, and input the closing balance on your bank statement. This balance is essential because it is used as a measure of your Reconciliation.
Auto-match transaction.
Zoho Books will apply smart matching to recommend the matches between your bank statement and transactions recorded in the system. Look over these recommendations, choose a game on transactions such as deposits, withdrawals, or payments.
Add Missing Transactions Manually.
When items in the bank statement, such as bank charges, interest income, and other transactions, are not reflected in Zoho Books, manually add them during Reconciliation through the +Add transaction button.
Adjust for Differences
In some cases, imbalances are brought about by small time differences or errors. The adjustment feature is used to record such differences, such as bank fees or errors in journal entries.
Check and Balance Reconciliation.
The balance in Zoho Books must match the closing balance on the bank statement, and no difference should be left. Once the balance has been made, click Reconcile to complete the process.
Best Practices of Competent and Proper Reconciliation
Bank Feeds: Zoho Books is also a bank feed integration that offers a chance to import all banking transactions in a day, saving a significant amount of time and errors.
Reconcile Frequently: Records are maintained fairly current, rather than having their records reconciled at the end of the month. Reconciliation, Weekly or bi-weekly, reduces end-of-month work.
Check Duplicate Transactions: Zoho helps in ensuring the detection of certain duplicates; however, a review of the transaction prevents the entry of a transaction into it twice.
Add Receipts and Documents: Add receipts, invoices, or bank statements directly to Zoho Books when reconciling the system to ensure that there are detailed records and the audit process becomes easier.
Export Reconciliation Reports: Export all the reconciliation reports in each period to trace all the transactions that have been reconciled and see the trends or anomalies.
Real-World Example of Bank Reconciliation in Zoho Books
Take the business for which the bank balance stands at $10,000 at the time of closing, and Zoho Books stands at $8,500. The differences can consist of deposits in transit ($550), money at checks, bank charges (as of $300), money in notes collected ($2,500), and service charges.
Reconciliation entails the matching of all such items, the addition of missing items, and the adjustment of the journals to enable the resolution of the discrepancy of $1500 to agree on records and present accurate financial reporting.
Conclusion
Bank reconciliation in Zoho Books is an essential operation that will help to reconcile your books with your bank records and give you clarity, minimize risks of making a mistake, and ease the financial management. A systematic process and automation tools provide Zoho with an opportunity to reconcile in a short period of time and keep financial records accurate and reliable by following a systematic approach. Periodical Reconciliation eventually enables businesses to make sound decisions, identify problems in time, and have fiscal discipline.
