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Bank statements and credit card reconciliation

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Any form of business should one way or the other develop a habit of requesting for a bank statement and conduct a credit card reconciliation process. These two processes help to define the behavior of a business along financial lines; when used very well, a business owner will know whether he is on the right track or he is heading for disaster.  It is important to define these two financial terms before we delve on their importance within a business entity.

A bank statement (account statement) is an outline of all financial transactions which transpired over a period of time on a bank account of a business or person while credit card reconciliation is an accounting procedure that is used when comparing two sets of records to make sure the figures are accurate.

Bank statements: These are printed on one or more papers; you can have these done inside then banking hall but some ATMs are offering a printing facility. With a bank statement, a business owner is able to:

  • Identify lost checks, deposits and unauthorized wire transactions
  • Notice and avoid excess/unjustified bank charges and make sure transactions are posted correctly by your bank
  • Spot and prevent misuse of funds from within your company
  • Guard yourself. Timely reconciling and quick objection to your bank concerning unlawful, false or forged checks presented to your bank and paid by that bank, might permit you to mitigate your business of responsibility for the loss and shift the risk to the bank

Credit card reconciliation: It’s of paramount importance for a business owner to reconcile their cheque book and credit card accounts by comparing their cheque copies, debit card receipts with bank credit card statements. Conducting such financial measures help you:

  • Know if money is being fraudulently withdrawn from an account
  • To know if financial institutions have not made any errors impacting your accounts
  • By giving you an overall picture of your spending
  • To assess whether you’re overspending and shows whether spending too much on banking and credit card fees
  • Spot duplicate charges, unauthorized purchases and erroneous posting amounts
  • Establish true liability even though transactions may not have posted yet
  • Account for online purchases or purchases with missing receipts
  • Administer your credit more effectively and minimize interest charges and late fees

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