Reconciling your bank account and credit card balance can sound like a trivial task, but there are a lot of reasons why you should make sure that you are doing it properly. This blog will talk about the benefits of reconciliation, and why it's important to do.
Results in Financial Accuracy
Credit card companies and banks use different methods to calculate interest and fees. This can result in your credit card balance being different from your bank balance. It's important to reconcile your credit card and bank balance to ensure financial accuracy.
When you reconcile your credit card and bank balance, you're essentially matching up the two balances to make sure they match. This process can help you catch any errors or discrepancies. If there are any discrepancies, you can then take steps to correct them.
Reconciling your credit card and bank balance can help you stay on top of your finances and ensure accuracy. This process can help you catch any errors or discrepancies so that you can take steps to correct them. By taking the time to reconcile your balances, you can help keep your finances in order.
Helps Detect Frauds
If you don't reconcile your credit card and bank balances, you may not catch errors or fraudulent activity. Each month, when you get your credit card statement, you should compare it to your bank statement. Look for any charges that you don't recognize, and follow up with the credit card company if you see anything suspicious. By reconciling your accounts, you can help protect yourself from fraud and identity theft.
Leads to Hassle-Free Audits
When your books are in order, and all of your transactions are accounted for, it makes the audit process much smoother and less stressful. Additionally, it helps you to avoid costly fees and penalties. If you are unaware of a discrepancy in your account, you may be charged late fees or interest. Finally, it helps you to maintain a good credit score. If your credit card and bank balance are not reconciled, it can negatively impact your credit score.
Validates Data Entry
Ensuring that all transactions have been properly recorded is important for both internal and external financial reporting. Reconciliations can also identify errors and discrepancies that need to be corrected. They also provide a good opportunity to review and verify the accuracy of your data entry and help to build confidence in the accuracy of your financial statements.
Accurate Tax Reporting
If you don't reconcile your credit card and bank balances, you could end up with inaccurate tax reporting. That's because the financial system only allows you to deduct the amount of interest and fees that you actually paid. So, if you have a balance on your credit card at the end of the year, you'll need to make sure that you've correctly reported the interest and fees that you paid during the year.
It's important to reconcile your credit card and bank balance to ensure that you are not incurring unnecessary expenses. Otherwise, you end up paying a lot of interest which is not good for your business. Fortunately, with the services of Mountain Top Bookkeeping, you can get a fair idea of how sound your company’s financial wellness is. Get in touch today!