What does that even mean? - Reconciliation

Bookkeepers suck at explaining what they're capable of doing for you, by and large.

Most of us are numbers people more than we're people people.

So let's explain one of the primary tasks that even the most bare-bones bookkeeper should be performing for you: Reconciliations.

Reconciliation is pretty similar to something I learned about in high school - balancing a checkbook. Remember those? :P

During the reconciliation process, your bookkeeper will compare what's on the bank statement for a given period, what's in your books for the same period, and explain or correct any differences.

For example, when looking at each of those lists of transactions your bookkeeper might see that the bank statement has a balance $300 higher than what's on the books. On the last day of last month, you wrote a check to pay a contractor $300, which they haven't cashed yet. Because you help your bookkeeper do their job as well as possible for you, you had let them know about that payment and so they recorded it in your accounting system. Thanks to good documentation and processes, they (and you!) can be pretty confident that that outstanding check is the source of the discrepancy and that everything seems to be in order.

On the other hand, what if there was no check for that $300? That's when the biggest value here happens.

Reconciliation is most important as a process for catching errors.

If we start with that same discrepancy, your bookkeeper might do some digging and discover that the difference is because a payment to one of your vendors was recorded, but never actually made. If that had gone unnoticed, you'd hurt your relationship with that vendor.

If the bank statement was lower than what's in your books, it might be because sales were recorded incorrectly or duplicated in your bookkeeping. So without reconciliation you would be reporting extra income on your taxes which you never actually earned or benefited from.

Recs can be used to catch bank errors, fraud, and even embezzlement, too, when a diligent expert is handling them for you.

So when bookkeepers say they're reconciling your accounts, that's not just checking some boxes and letting QuickBooks do some calculations. They're really helping you keep your business safe and making sure that the data entered into your books is accurate.

That means that the numbers you use to make decisions will be more accurate and based solidly in reality.

Did you learn something here? Is your current bookkeeper consistently working through this process for you?

What else do you want someone to help you understand about the bookkeeping you're getting?