Bank Feeds Aren't Reconciliation: What Every Owner Should Know
Your bank says you have $14,200. QuickBooks says $21,800. Which one is lying?
Most owners have stared at a gap like that, felt their stomach drop a little, and closed the laptop.
Last week we talked about what messy books really cost. This week we're tackling the single most important step in cleaning them up: reconciling your accounts.
What reconciling really means
Reconciling is matching every transaction in your books to your bank or credit card statement, line by line, so that the ending balance in QuickBooks equals the ending balance on the statement.
Here's the part that surprises a lot of owners: bank feeds are not reconciliation. Downloading transactions into QuickBooks just brings them in. It doesn't confirm that they're complete, that nothing was counted twice, or that each one was matched to the right invoice or bill.
What we usually find when accounts haven't been reconciled
Duplicate transactions. A payment gets entered by hand and then downloaded again from the bank feed. Now it counts twice, which overstates your expenses or your income.
Phantom income. A customer payment gets applied to an invoice and also recorded as a separate deposit. Your sales look higher than they really are, and so does your taxable income.
Old checks that never cleared. Checks written years ago that were never cashed or voided are still sitting in the register, making your balance look lower than it is.
Missing transactions. Bank fees, interest, automatic payments, and card charges nobody entered.
Changed history. If someone edited or deleted transactions in a period that was already reconciled, everything after that point is off.
How to catch up without losing your mind
Find your last clean month. QuickBooks keeps a history of past reconciliations. Find the most recent one that was done correctly. If an account has never been reconciled, start at the beginning of the year.
Gather your statements. Download the PDF statement for every month since your last clean reconciliation.
Work one month at a time, in order. It's tempting to jump straight to September. Don't. Each month's ending balance becomes the next month's starting point.
Don't force it to balance. Never accept a "reconciliation discrepancy" adjustment just to make the numbers match. That buries the problem in your books, where it will cost you later.
Do the credit cards and loans too. Credit card accounts need reconciling just like bank accounts, and your loan balances should match what your lender says you owe.
Keeping it quick from here on
Once you're caught up, reconciling an account with normal activity often takes only a few minutes a month. Pick a date, like the 10th, when the prior month's statements are in, and make it routine. A small monthly habit is far easier than a big year-end rescue.
What it means for your business and your life
When your accounts reconcile, you can trust the numbers. You stop logging into the bank every morning to double-check what QuickBooks says. Your tax preparer doesn't spend billable hours untangling transactions. And when you sit down to make a decision, you're working from facts instead of hopes.
There's real peace of mind in that. You don't have to wonder whether the number is right. You know it is.
What it takes to get started
Make a list of every business bank account, credit card, and loan, and note the date each one was last reconciled. That list tells you how big the job is.
If the list is long, or the dates go back further than you'd like to admit, we can catch your accounts up and then keep them reconciled every month so you never fall behind again.
Who we are
Business Advisory Services LLC has helped small businesses across Wisconsin and surrounding states keep their books, payroll, and finances in order for more than 20 years. Through QuickBooks Anywhere, you and our team can work in the same QuickBooks file from wherever you are.
If your bank balance and your books haven't agreed in a while, call us at 608-831-4900 ext. 801 or text us at 608-347-3010 or visit quickbooks-anywhere.com. We'll help you get them back on speaking terms.
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