One of the tasks on your to-do-list before the end of financial year should include reconciling your accounts receivable and your accounts more generally. Account reconciliation can be a simple or complex process depending on the size of your business structure.This should be equal to the business’s debt balance.
Reconciling bank accounts in general to the profit & loss statements and balance sheets
What does reconciling mean?
Reconciling bank accounts often refers to the process of providing documentation indicating that a business’s account balance is accurate.
How cloud based accounting products like Xero can automate this process.
Cloud based accounting programmes such as Xero can make it a lot easier for business owners to undertake these processes themselves as opposed to a bookkeeper or an accountant. For example, the Xero programme features an automatic bank reconciliation feature. Here, Xero connects to your bank account and organises and categorises your bank statements automatically. This way it is effortless for the consumer to keep accounts up-to-date and accurate.
Still unsure about what your business should consider before the end of financial year? Take a look at LawPaths post on EOFY reporting and renewing!
Your accounts receivable may be out of balance if:
- An income is made incorrectly to the debtor’s account instead of an income account
- A customers payment is dated from before the invoice date
It is important for small businesses to stay up to date with their bank reconciliations in order to help ensure that financial statements are accurate. Not only this, it significantly assists with tax returns.
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