Accounting reconciliation: What it is and how its done

account reconciliation

This is where accountants spend the bulk of the close cycle, acting as detectives and internal auditors to find the source of every exception and the supporting information to explain them.3. Providing supporting calculations and documentation where required (e.g., if an account doesn’t balance by a wide margin, explain why). External auditors, regulators and even senior management all need trusted numbers and transparency and documentation to find the sources and explanation for every exception quickly. Further analysis may reveal that four transactions were improperly excluded from the general ledger but were properly included in the credit card processing statement.

The easiest way to begin this process is to have your sub-ledgers handy along with your general ledger. We’ll cover best practices and strategies that organizations can use to streamline their reconciliation processes, minimize errors, and establish a solid foundation for financial management. Account reconciliation is an essential process that can feel a lot like a puzzle. You’re matching numbers, finding discrepancies, and ensuring everything makes sense.

Improve Account Reconciliation With NetSuite

This one doesn’t have to be a comparative trial balance, because you’re only interested in checking the new balances after all your journal entries have been completed. For example, when reviewing your trial balance for the current year, you notice that your travel expenses have been averaging $1,500 a month, but in July, travel expenses jumped to $5,000. With Peakflo, empower your finance team to focus on strategic account reconciliation initiatives rather than getting bogged down by tedious manual tasks. Experience the benefits of precision, efficiency, and time savings in your financial operations. Regular reconciliation helps spot any unauthorized transactions, preventing deceptive actions by team members or third parties. Accurate information reduces the risk of missing deposits or accidentally overdrawing accounts, allowing for better budgeting.

It involves reviewing each individual transaction to see if the amount captured matches the actual amount spent. Documentation review tends to be more accurate because it’s based on real information instead of estimates. Download the HighRadius Account Reconciliation Datasheet, where we cover the end-to-end automation to achieve an accurate, audit-friendly account reconciliation process of the AI native platform.

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And for those of you still handling your accounting manually, making the move to accounting software will eliminate much of the work you’re doing using manual ledgers. Some of the sub-ledgers you may be using include fixed assets, payroll, accounts payable, and accounts receivable. If you use accounting software you can skip this step, as it’s completed automatically.

Reconciling your accounts can help you achieve this goal by identifying discrepancies and taking appropriate corrective action. This article elaborates on reconciliation meaning in accounting, account reconciliation process and tips to carry out reconciliation activities accurately and on time in detail. Account reconciliation is an essential process for any business with a customer focus. Reconciling your accounts can help to identify and correct errors, ensuring all transactions end up correctly. The month-end close, adjusting entries, posting to the GL and generating financial statements and reports are only part of the story in what’s referred to as the full-spectrum of FP&A activities.

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