Top 4 Benefits of Reconciling

It can be difficult to carve out time for an admin task that may feel pointless.

So, let’s talk about it!

Reconciling is a huge part of maintaining accurate records for your business yet so often it's a step that gets missed or overlooked.

While yes, it is another admin task to accomplish - it holds quite a few benefits for a task that can take less than 5 minutes once you get the initial reconciliation completed.

What is reconciling?

Merriam-Webster defines reconciling as "a check (a financial account) against another for accuracy"

Basically it's an accounting process that takes one record and matches it to your books to make sure everything is accurate and balanced.

Now let's talk benefits!

Identifies errors and discrepancies

This is hands down the most common and frequent benefit that you will see. Once you start to regularly reconcile, you will notice the times where your numbers might have gotten inverted (14 instead of 41), you smashed the wrong button (a 2 instead of a 5), catch duplicates or even things you forgot to enter!

All these things can easily happen because you're human and it's okay! It's just another reason why reconciling is so important.

Ensures accuracy

This benefit is the other side of the last points coin.

When you have gone through and rectified all errors and made adjustments for all discrepancies.. this allows you to have full confidence in the accuracy of your books. How amazing is that?!

All from simply reconciling.

Staying compliant

This isn't applicable to everyone, but there are industries and some contracts that may require you to keep accurate financial records and reconciling is an essential piece of that. Mistakes are inevitable because again, you're human, and if you're not reconciling the likelihood your books are accurate is not high.

I don't say that to shame but more so to bring awareness to the human element.

It helps prevent fraud

Did you know that it also has a secret power of helping to prevent fraud?!

Let's break it down:

→ Regular reconciling can help you identify unauthorized transactions before it goes unnoticed for an extended period of time

→ It allows you to catch errors in your financial records; which can be fraud but also a simple mistake. Either way, catching these errors allows you to investigate the root cause and take appropriate action to prevent future problems

→ Having accurate and up to date records is critical to the integrity of your finances because this allows you to take corrective action in real time as opposed to months or years later when it may be too late.

→ Reconciling can help you identify weaknesses in your internal controls; things like insufficient oversight or realizations that job duties may not be appropriately distributed.

How cool is that?!

As a bonus, it also enhances transparency! Which is top 5 goal regarding any companies financial wellbeing.

When you are confident there are no unexplained or suspicious transactions and that your records are accurate.. you really start to instill a sense of pride in your financials.

In conclusion

Reconciling is very important to the accuracy of your financials. I can do maintenance bookkeeping in my sleep and I still catch mistakes I make when I am reconciling sometimes.

It's genuinely a tool for you to be better and do better. We have so many everyday tools we use to correct mistakes from white out to spell check, so make this a part of your business toolbox! Take the extra 5 minutes and keep up with your reconciling, my friend! It's to your benefit.

How often do you reconcile?!

Let me know! Comment below or send me an email!

audrey@thegracefulpenny.com