It’s a concept that’s familiar to anyone who handles business accounts, large or small. Reconciliation is an accounting process that uses two sets of records to determine if figures are correct and in agreement, such as the amount of money that’s debited to an account matches the amount that’s been spent.
Properly reconciling accounts also ensures that transactions have been classified correctly, and it’s a useful way of checking to see if there’s any fraudulent activity, and for explaining the difference between competing financial records or account balances. For example, some differences may be due to the timing of payments or deposits, so they’re acceptable. Others might be unexplained and need to be investigated further.
We all understand that the process can be frustrating and sometimes stressful for the person who has to carry out account reconciliation. Miscoding or misallocation of transactions can lead to inaccurate financial information being presented to senior managers, owners and directors; so it’s necessary to ensure account integrity and accuracy. This is why it’s so important to have an effective reconciliation function within any accounting system.
For example, MYOB’s Greentree product features a robust, secure financial management suite designed to provide a full range of essential accounting functions. One of the modules is General Ledger, which features a reconciliation tool that is quick and simple. It’s a half-module that needs to be purchased separately, and it ensures the accuracy of financial records and saves time and effort, because the module reconciles debit and credit General Ledger transactions for individual accounts within each financial year.
At the heart of this feature is its simplicity; all the accounting person needs to do is tick off the matching transactions in the system, so they can see at a glance what’s left making up the balance. For Work In Progress and PO Clearing, those processes can be largely automated.
All too often, reconciliation gets pushed down the list of accounting priorities, because it is so time-consuming and potentially stressful. General Ledger’s reconciliation tool reduces that stress and stops it from becoming a hated task that’s continually put off.
Reconciliation may be a task you’ve been struggling with for some time. Ask yourself:
- Is your reconciliation process an effective one, or is it difficult to work with?
- Are you reconciling as often as you should be, or do you find yourself putting it off?
- What’s stopping you from reconciling your accounts?
The answers to those questions could indicate that it’s time to update your reconciliation process. Talk to your Endeavour consultant about the General Ledger module and its reconciliation tool, to determine if it could benefit your accounting processes and make sure your financial records stay up-to-date, accurate and honest.