The biggest bank book mistakes fast-growing companies make
Is your bank book keeping up with your company’s growth, or do you find yourself spending hours reconciling transactions at the end of every month?
As your company grows to include multiple entities, bank book reconciliations become more time-consuming if you’re primarily relying on manual processes. It also creates more opportunities for errors that can seriously derail your finances.
Here are five common bank book mistakes growing companies make and how to avoid them.
The biggest bank book mistakes
Your assistant made a wire transfer to a supplier but forgot to enter it in your accounting system. Suddenly, you’re overdrawn at your bank.
A surefire way to lose money and increase vulnerabilities is with missing transactions. You rely on your accounting system to have your available cash balance as there are often many items that have not yet cleared your bank.
It’s an honest mistake that can have serious consequences and fines from your bank as checks are rejected.
Rejected and missing cash receipts
You have 23 restaurants depositing cash they received during the day. Did they all make it to the bank?
You’ve received payments from your customers and sent them to the bank but did not follow up with a bank reconciliation at the end of the month to see that they were rejected. Often using ACH transactions to receive payment can take up to five days to clear. Without follow-up and month-end reconciliations you may be overstating your cash balance.
In order to diminish the chances of fraudulent activity, your accounting team should segregate job duties. The person doing the bank book reconciliation should not be the person handling cash receipts or payments. The reconciliation process would highlight missing funds. Misdirecting a payment or deposit can easily be hidden in an accounting system, but not in the bank statement.
You have set up automatic withdrawals with vendors and over time you may have several of them. Without reconciling your statements, you will have no control to see if they are accurate or if you are not using the service any longer.
Failing to properly reconcile bank statements with your own records
You know how important it is to reconcile your bank book with your own records at the end of each month. Diligent bank book reconciliation helps you uncover discrepancies due to bank errors, your own internal errors or potentially fraudulent charges.
However, the process is cumbersome if you have to repeat it across dozens of companies. You may have many transactions for the same amount to apply across multiple locations, making it easier to miss something. You will also need to account for charges that may not appear in your transaction history, such as service fees. When you need to reconcile them for each location, it’s much easier to miss something.
Simplify bank book management with Gravity Software
If you’re experiencing these bank book challenges, you’re not alone. Fortunately, the right accounting software makes bank book management much easier. Built on the Microsoft Power Platform, Gravity Software® is designed specifically for multi-entity accounting. You can manage each location as a separate entity while easily managing shared transactions across the entire company with a single entry.
Gravity integrates with more than 7,000 banks in the U.S. and Canada to provide automatic feeds for all of your company's banks and credit card providers.
You can use a dropdown menu to assign categories to expenses and can even set parameters to automatically categorize certain types of charges, such as gas purchases. You can reconcile transactions with one click or automatically reconcile checks based on the check amount and check number.
You can also apply rules for transactions that may have occurred outside your software, such as applying a service fee, instead of creating numerous individual transactions.
This significantly reduces the time you spend on bank book reconciliation and the potential for errors.
Better. Smarter. Accounting.