Benefits of Bank Reconciliation Services

Benefits of Bank Reconciliation Services

Detects Fraud

With the help of the bank reconciliation process, an organization matches its distributed checks with the amount or entry entered in bank statements. A vigilant review based on proper sheets and procedures help to disclose fraudulent activities such as payment made for illegitimate business purposes, payments transferred to illicit employees or unauthorized vendors and not revising sanctioned check amounts and details.

Prevents Overdraft

The on-hold time between cash outflows to vendors and employees as well as payments coming from clients and customers can vary greatly. This particularly affects an organization with very low cash reserves. Regular bank reconciliations help entrepreneurs manage or postpone payments that may safeguard organizations from business overdrafts, bounced checks, insufficient funds and extra interests.

Identifies Bank Errors

Bank representatives may make accounting errors such as transfer wrong sum, record wrong check amount, enter the amount in a wrong bank account, omit an entry from an organization’s bank statement or record a duplicate transaction. Reconciling bank accounts give entrepreneurs time to notify a bank of its errors, allowing them to find the difference and correct the error.

Improves Collection

Bank reconciliations let organizations handle their accounts receivable better. When a customer’s payment is cleared from a bank, the receivable remains no longer outstanding and therefore, requires no further action. However, if a client’s check doesn’t clear, that alerts management to be more focused in its collection process.

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