An important part of your online accounting and bookkeeping is performing regular, monthly bank reconciliations. Sounds scary right? After all, what exactly is it? Why is it important for your business? And how do you do it?
What’s a "Bank Reconciliation"?
Reconciling a bank or credit card statement simply means comparing and matching your "accounting" records (in Kashoo) to the transactions listed on your bank or credit card statement. If they match, congratulations, it means your books are ACCURATE and UP-TO-DATE.
The good news is that you’re probably more familiar with the idea of bank reconciliations than you realize. Chances are, many of you opened your first bank account and your bank gave you a “check register”—that funky little booklet you were supposed to use to track all the deposits you made and checks you wrote.
Regardless of what your bank statement said your balance was, this "register" allowed you to see what your REAL balance was by tracking all of your transactions plus any checks that were in progress, in real-time. (Before "real-time" was even a thing.) Even if you never used the check register - maybe you tossed it in the trash - you probably had your own system to track your "personal real-time" bank balance, less incoming and outgoing checks. That's the idea of bank rec in a nutshell.
The bank reconciliation feature in Kashoo works the same way—ensuring you have an accurate understanding of the “true cash position” of your business at any given time. That’s not the only benefit, though. When you’re tracking your income and expenses online in your accounting app, chances are every now and again you may miss something. Reconciling the transactions you’ve entered in your accounting app with the transactions recorded in your bank account will ensure nothing is missed. In simple terms: what you enter in your accounting software MATCHES what it says in your bank account.
Why is it important?
Let’s recap the benefits of a bank reconciliation:
- Ensures you have an accurate accounting of your business's "true cash position"
- Creates a valuable cross-checking system, and safety net for your books.
- Ensures there aren’t any transactions you forgot to enter, or any data entry errors in the transactions you entered in your accounting app.
- No surprises!
So, How Do I Actually Do a "Bank Rec" in Kashoo?
Good question, and the answer is, it’s easier than you think! Here's the short answer. Import your bank transactions into Kashoo, and once your data is in Kashoo it’s a simple process to reconcile (Think: "match") the bank transactions to transactions already entered into Kashoo. If there is no transaction in Kashoo to match it to, you can create one with a couple of quick clicks.
But before you get to that, let’s talk about how you can import your transactions. You have two options, and both are super easy!
The first is an “automated data feed” from your bank. Kashoo supports more than 14,000+ data feeds, which means there’s a very good chance you’ll be able to set up a direct, secure connection to your bank and credit card accounts and have your transactions automatically import into Kashoo. When you set up your bank feeds, the first import will include the last 90 days, and thereafter transactions will be imported on a daily basis.
If a data feed is not available, no worries, your other option is to upload soft copies of statements. With just a couple of clicks, you can download your data from your bank account and import it into Kashoo. This is a good option even if an automatic data feed is available but you want to import several months of transactions. An automatic feed will only go back 90 days, so a manual import gives you some more flexibility in getting started, if you’re looking to capture a bunch of financial history. Regardless of how you get your data in, you’ll be surprised how quick and easy it is to reconcile the transactions, and ensure your financial data is accurate, complete, and up-to-date in Kashoo.
How do you know when you are done? Kashoo's Bank Reconciliation report will show you everything that has cleared, what's still outstanding, and makes sure that everything is balanced between the real-world and Kashoo.
Don’t worry, if you get stuck you can always contact Kashoo’s Customer Success team for assistance. Call 1-888-520-5274, email us at firstname.lastname@example.org, or use the handy "live chat" tab at the bottom of your browser window. We’re always here to help.
QUICK TIPS - How to Get Started with Bank Rec
- Set up a "Bank Feed" or import your bank statement
- Go to your "Banking" page in Kashoo
- Match the imported transactions to your entered transactions
- Add any imported transactions that do not yet exist in Kashoo
- Once you're done, make sure to "Add" the statement so that you can review the reconciliation report
- Once you have added the statement, click "Generate Report" this will ensure that you're truly reconciled and that everything balances between your bank account statement and your accounting software.
QUICK TIPS - Best Practices for Bank Rec
- Start with your OLDEST month first! (Trust us, this will make your life much easier. It's what we do.)
- Only do ONE month at a time and make sure to "Add" each month so that you have a saved statement in Kashoo.
- Make sure that there is no "Difference" in your bank reconciliation report each month.
- Once you have reconciled all your accounts use Period Locking in Kashoo to avoid accidents!
Want some more info on Bank Reconcilaitions? Check out our workhop video below: