These AAIs define the range of accounts that you want to reconcile and are required for all four methods of account reconciliation. If the trial balance is greater than the aging schedule balance, it is likely due to a journal entry posted directly to the general ledger instead of to the sub-ledger. In addition, let the amount of the difference guide you in your reconciliation. For example, if the difference is $100, look for transactions whose size is close to that. Set up a reconciliation statement or reconciliation report in a spreadsheet, with the trial balance at the top of one column and the balance you will be comparing it to in the other column.

However, depending on the size of your transactions, daily sales volumes, and how large your staff is, you may find that monthly bank reconciliation is sufficient. Balance sheet reconciliation is the process of matching the closing balances of all the accounts of the company that forms part of the company’s balance sheet. It is done to ensure that entries used to reach the closing balances are entered and classified accurately so that balances in the balance sheet are appropriate. Account reconciliations can be performed on a monthly, quarterly, or annual basis. The company’s management team needs to assess which reconciliations have the highest risk of fraud or error, and that will help determine how frequently the account should be reconciled. Additionally, the materiality or the dollar amount of the reconciliation plays a critical role in determining how often the account should be reconciled.

Error Reduction

For example, a company maintains a record of all the receipts for purchases made to make sure that the money incurred is going to the right avenues. When conducting a reconciliation at the end of the month, https://www.bookstime.com/ the accountant noticed that the company was charged ten times for a transaction that was not in the cash book. The accountant contacted the bank to get information on the mysterious transaction.

Along with death and taxes, it’s certain that humans make mistakes. The data and amount of transactions that must be compared within the reconciliation process requires utmost attention to detail. By using automation software, you will save valuable time and make the GL reconciliation process run seamlessly. The software is able to pull all data from the necessary systems and compare the data side-by-side. GL software will automate the workflow, safely store all data, store all policies for quick reference, provide audit trails, and even present your team with templates to standardise the process simply. While it is possible and somewhat common to have discrepancies within your accounts, some will be easily explainable and others will require some investigation.

Stay in control

Versapay’s collaborative AR automation software combines powerful automation capabilities with tools for collaborating with team members and customers, all in one cloud-based platform. In these situations, accounting teams greatly benefit from having a collaborative accounts receivable solution, which allows them to communicate directly with what is an account reconciliation customers in a single platform. Companies like Userlane were able to leverage Chargebee to close their month-end financials in 80% less time, saving them time and allowing them to forecast their cash flow more accurately. A company must complete reconciliation before certifying its financial information and issuing its financial statements.