Bank Reconciliation

One of the many important tasks we perform as bookkeepers is bank reconciliation. Keeping the numbers accurate for our clients helps them to function with real time data in their businesses. There are times when a business is having trouble collecting from its clients. It is during these times that a bank account can get low in funds. It is always important to keep an eye on the bank balance and even more so during times of financial hardship.

Without an accurate accounting of what is in the bank account, checks can be written and sent out without enough to cover them. Of course the result is overdraft fees, negative balance fees and returned check fees, besides the time spent cleaning up the mess from a batch of checks that bounced. Overdraft fees can add up quickly costing a business hundreds of dollars a year if proper accounting is not done on a regular basis.

Never hesitate to tell a client when you see their balance becoming critically low. Look at the books and try to determine where the problem is coming from. Do this together with your client as often as possible. Is too much going out in unnecessary expenses or is it an accounts receivable problem that is slowing cash flow? Maybe the business isn’t profitable at the moment. Take a close look at the costs of producing products or performing services and see if the business needs to charge more. Maybe the business can lower its costs and expenses by finding new suppliers.

Bookkeepers can be quite busy just going through paperwork, entering invoices, paying the bills, or processing payroll. We should spend just as much time keeping an eye on all accounts and analyzing the profit and loss statement on regular basis. By doing so we will have a thorough understanding of the cash flow pattern of our client’s businesses and be able to keep them abreast of how they are doing financially. Your client will appreciate the fact that you are looking after the financial well-being of their business, knowing that you are working hard for them and not just accruing billable hours.

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