- September 17, 2018
- Posted by: Hope Davis
- Category: Government Contracts
By Joy Parker
For most accountants, reconciliation is considered a favorite pastime; something fun to do in our spare time. We know that debits always equal credits and if that’s the case reconciliation should be easy. At least we would hope. But that doesn’t always happen. Many times the debits and credits tend to hit the wrong account or in the wrong direction. And although your balance sheet actually balances it doesn’t mean it’s right.
In most small businesses the accounting staff is lean and usually wears a lot of hats. And although there are great intentions to ensure that everything is completed accurately and timely it doesn’t always end up that way. The scenario usually ends up where one month has ended and then another month is about to end and the bank needs your financial statements ASAP. At this point it is where short cuts begin and before you know it is six months into the year and you really are not sure if any of the accounts are correct.
From experience, this is when a small business can get in real trouble. The longer you cover the mistakes or ignore the problems the harder it is to fix. At this point a business can lose a lot if their financials are in disarray. Banks will deny loans, government agencies will penalize and a business’ reputation can become flawed.
Reconciliation is the easy answer. Reconciling the majority of the accounts will keep your financials in line and keep your owners happy. Finding time to reconcile monthly is the hard part. Reconciliation doesn’t have to take all of your time if you plan and work smart. Most accounting systems can help without any extra work if you follow the system rules. Most accounting systems have subsidiary reports that will reconcile with general ledger accounts such as accounts payable and accounts receivable. Making sure these reports reconcile should only take a few minutes. Finding creative ways to reconcile accounts can also shorten the time to reconcile. For example, exporting data to excel can make for quick reconciliations. The use of vlookups and pivot tables can provide data quick. The initial set up might take a bit longer but each month should get quicker as you refine the process. And when you stay on top of things the repeated errors are resolved and corrections become minimal.
Even when time is not on your side reconciliation should be top of the list to make sure your business is running properly and surprises are not found down the road.
Hall Albright Garrison & Barnes can help. When your staff is overwhelmed we can come in and focus on making sure your financials are accurate and timely. With a staff that has experience working on the small business side we know what makes it work. While you are doing your many other jobs we can focus on those items that you can’t.