What Is Bank Reconnection? Here's Understanding And Reasons

YOGYAKARTA Problems regarding the recording of financial statements are almost always found in a company. Not a few companies are making bank reconciliation because there are nominal records errors committed by accountants. So, what is bank reconciliation?

To answer this question, see the following explanation.

What is Bank Reconciliation?

Compiled by VOI from various sources, bank reconciliation is an activity to detail the difference in bank-owned transaction records as the manager of financial transactions with companies experiencing nominal records errors.

The details are intended to verify and match the bank statement belonging to the company.

Bank reconciliation is very important to do because the information contained in bank reports is a bank record of all existing transactions and has an impact on the bank account belonging to the business entity over the past month.

Reconciliation must also be completed regularly on all accounts owned by the customer. This is to ensure that the company's cash records are correct. In addition, bank reconciliation is also used as a better control over cash receipts and payments.

Why do Bank Reconciliations Must be Worked by Companies?

As is known, every company must open an account in a bank in order to save their money.

The amount of cash stored in a company in banks is generally only small cash, aka petty cash.

Well, the opening of a company's account in banking aims to control cash in general. With the existence of an account in a bank, the company will have a record of income and expenses obtained from banks.

Even so, the company usually still has its own records regarding the funds that come out or go in, considering that differences between the company's records and the bank statement issued by banks are often found.

The difference in the quantity record occurred due to costs that were not taken into account by the company, such as bank administration costs, interest distribution, and others.

In the ledger owned by the company, there are transactions that involve checking accounts. On the other hand, the banking sector also creates a company's checking, depositing, service costs, and other company goods.

The records issued by the banking sector show activity in the bank account as well as the balances contained in it. The records are usually issued by banks at the end of every month and are given to related companies.

When receiving a bank statement from banks, the company must verify whether the amount of bank reports is in accordance with the amount in the company's cash account in the general ledger, and vice versa. This verification process is then called bank reconciliation.

The reason for bank reconciliation is very important because the company can find out the difference in cash balances in bank statements that are different from the company's bookkeeping.

In addition, bank reconciliation can also be used to determine the cause of the difference in cash balances in bank and company records.

So, when will Bank Reconciliation be carried out?

Bank reconciliation should be carried out at least once a month. Verification of these financial statements can be carried out at the end of every month.

Bank reconciliation must be carried out immediately after the banking sector sends a bank statement report to the company. The bank's account usually contains initial cash balances, one month transactions and cash final balances at the bank.

However, it would be better if the company made bank reconciliation every day by accessing information through the official relevant banking website.

By making bank reconciliation every day, the company can find problems in bank accounts, find problem sources and find solutions.

That's what information about what bank reconciliation is. May it be useful.