Common Mistakes When Reconciling in QuickBooks — And How to Fix Them
Reconciling your bank statements with company records is one of the most important internal control measures a business can implement. A bank reconciliation consists of checking each transaction on the statement given to you by the bank and matching them with every transaction on that account that you have kept as a company record in your books. There are many reasons why reconciling is important. Let’s go through a few of them.
First, and most obviously, reconciling maintains the accuracy of your records. This is crucial for any business that wants to prevent financial surprises when trying to merge, acquire, or grow.
Another reason why bank reconciliations are important is that they are an inherent safeguard against embezzlement or other financial crimes. When you perform a bank reconciliation, you must put every transaction under a microscope. If something is off, there’s a good chance it will be discovered in the reconciliation process.
Finally, bank reconciliations are a good way to remind yourself of transactions that require additional attention. Maybe you have a client who forgot to pay for the last month of service. Maybe you failed to give a deposit back to a client who, as it turns out, deserves it. Whatever the case, reconciling is a surefire way to audit ongoing transactions and take any action necessary.
Unfortunately, bank reconciliations are time-consuming and can lead to a lot of frustration. QuickBooks is by far the most popular accounting and bookkeeping software out there, and for good reason. It’s simply the best when it comes to sorting out your financial information and reconciling your transaction data with your bank statements.
Sometimes, however, using QuickBooks to perform your bank reconciliations can be a little tricky. There are a number of things that can lead to complications and frustrations in the process, which can add needless stress and time to your business’s accounting. Let’s walk through a few of the issues that can occur when reconciling in QuickBooks. We’ll also give you actionable tips on how to fix and prevent these issues, so you can make your next reconciliation as fast and as efficient as possible.
Issues with Reconciling in QuickBooks
You have the wrong beginning balance in your QuickBooks records.
Before you go through the pain of combing through your transactions and matching each one to your bank statement, it’s important to check the beginning balance of your QuickBooks record and make sure it matches the beginning balance on the bank statement. Remember, the bank statement shows what actual transactions happened on the account, so if the numbers do not match, it is a problem on your end. If your beginning balance on QuickBooks doesn’t match the balance on the bank statement, you will need to fix this problem before continuing.
This problem often arises because of changes in a past QuickBooks record. To fix this issue in QBD, simply run a Reconciliation Discrepancy Report. This will show you records from past time periods that were modified, voided, or deleted since the last reconciliation. In QuickBook Online, you’ll see a link that says “We can help you fix this” near the mismatched balances notice. Clicking this link will bring you, again, to a list of transactions that have been changed, deleted, or voided since the last reconciliation.
To fix a mismatched beginning balance, just comb through those transactions and ensure that each of them get corrected.
Some transactions from the end of one month did not clear until the next month.
If you have issues matching up all of the transactions from QuickBooks to a transaction on the bank statement, it could be because of a timing issue. Sometimes, when you make a purchase or take a payment on a bank account, the transaction may take a few days to “clear” or to be completed on the bank’s end. As the end of the month approaches, the likelihood that each transaction actual clears next month increases, even though you’re recording them in QuickBooks as having been performed this month. This can lead to discrepancies between what your QuickBooks account says and your bank statement says.
If the transaction in question still hasn’t cleared by the time you are reconciling (i.e. you’re reconciling a brand-new statement), leave the transaction as is and make a note that the transaction is not cleared yet. When it does clear with your bank (likely in a few days), go back and mark the transaction as cleared.
If the transaction already cleared the following month (for example, if you are reconciling old statements), you can ensure that the transaction cleared by looking at the following month’s statement, and then mark it as cleared on your reconciliation for the previous month.
This problem is especially common with checks. If you used a check to pay a bill, remember that, in your records, the date you record the bill as paid is the day you physically gave the check to the service provider.
Your beginning balances matched, but your new ending balance does not.
Let’s say your reconciliation began with matching beginning balances. Then, after performing the reconciliation, your ending balances do not match. This means that something went wrong during the reconciliation itself: Maybe you missed a transaction when reconciling; maybe your company recorded a transaction that didn’t actually happen on that account; maybe the failed to record a transaction that did happen. Skim through all of the transactions you just reconciled and ensure that the amounts match. While you’re at it, you may as well make sure the dates, transaction types, and payers/payees match as well.
If that doesn’t fix the issue, check with your team about mis recorded transactions. This is a common source of mistakes when reconciling with QuickBooks, so don’t worry. Just find the problem, sort it out, and carry on.
These are just a few of the possible problems that companies can have when reconciling bank statements in QuickBooks. If you are having issues with your QuickBooks software, or with reconciling in general, have no fear! Booktied specializes in helping businesses train their employees in QuickBooks. We also offer catch-up bookkeeping for businesses that need to get their financials accurate, fast. For all of your general bookkeeping needs and QuickBooks questions, contact Booktied!