A bank Reconciliation statement is a document that is used to tally the records on a company’s balance sheet with that of the company’s bank account. It documents all the financial activities of the business over a while. Reconciliation of the bank statement with internal accounting records helps to determine differences between the two and thus make required changes in the accounting. After matching the records adjustments are made to equal the two amounts. The process helps in preventing fraud or other unintentional discrepancies or manipulations. It ensures that payments have been cleared and helps to keep a check on transactions and deposits. It allows the identification and elimination of errors that could potentially harm the company’s finance.
A bank reconciliation statement is a very crucial aspect of a company’s accounting operations and the safety of finances. it is necessary for keeping track of payables and receivables, identifying inconsistencies in financial statements, maintaining fair transaction records, and preventing embezzlement. However, it can be quite a time-consuming and complicated process. Outsourcing the work to companies like us can reduce the burden. We could help make the process simpler, faster, more efficient, and more accurate for you which would allow you to save a lot of time, energy, and resources.
Common Problems Of Bank Reconciliation
Reconciliation is a very necessary and useful operation in any business that helps in keeping track of transactions and preventing discrepancies. However all companies, small or big face some major challenges while carrying out the process:
Multiple Bank Accounts And Currencies
Companies very rarely use a single bank account for their financial management. Usually, there are multiple accounts and often in multiple banks. Even if the bank is the same, the companies require many different accounts for compartmentalization of work and better structure and clarity. Moreover, different currencies are used especially when the business involves international transactions. All of this ultimately makes the process very complicated.
Different Formats Of Bank Statements
With so many different systems and software being used today, a single output can be produced in many different formats. It often becomes difficult to analyze and compare documents or information coming in numerous dissimilar formats. Without technically advanced professional assistance, the process becomes very cumbersome and demands more time and energy. This is a very common issue faced by most companies irrespective of their size and scale.
Breaking Down Bulk Amounts
Often transactions are compiled and presented in the bank statements in the form of bulk amounts instead of independent records. In such cases, the reconciliation process gets complicated as these large complicated sums have to be split before analysis. Matching aggregated transactions is a very elaborate process and cannot be done manually. It requires advanced methods of auditing. Often companies do not possess the technologies or systems that are required for the operation. In such cases, reconciliation of bank statements becomes very difficult.
Huge Transaction Volumes
In a business, a high number of transactions accumulate every single day. There are heaps of jumbled-up records to be matched. These need to be reconciled promptly and with precision. Managing numerous Piled up records is a laborious process. Businesses often lack the manpower and infrastructure to deliver the task. Moreover, if the work has to be done manually, it puts a huge load on the employees and mistakes would be unavoidable. The task becomes burdensome and poses quite a challenge to the working of the business.
How Outsourcing Bank Reconciliation Can Help Your Business
Outsourcing bank reconciliation to us would allow you to ensure that there are no unfair payment activities in the system. We efficiently evaluate the well-drafted sheets to expose any fraudulent activities such as illegal payments, funds transferred to unauthorized businesses, payments made to unfair employees, or unmonitored cheque sanctions.
With the help of our service, you can easily detect any financial discrepancies in your company which otherwise would have been quite a hectic chore.
Finding And Correcting Accounting Errors
It is almost impossible for work done manually, to be errorless. When the process of reconciliation is carried out by the employees physically, there are bound to be mistakes in the entering, tabulating, or scrutinizing of data, or accounting errors such as transferring or recording incorrect amounts, etc. Delegating the job to companies like us having specialized, well-structured, and advanced systems to carry out the functions in the most efficient manner, ensures accuracy. By digitalizing the procedure we help in identifying and eliminating accounting errors that would have otherwise been difficult to find.
Helps To Find Uncollected Receivables
Sometimes due to various reasons such as multiple entries, payments that have already been made can appear late in the bank statements, or payments that are yet to be made or received may be missed. Careful Re-evaluation of bank statements when the reconciliation is outsourced to us, would help in bringing such uncollected receivables into focus. This would allow our clients to track transactions and receivables and clear the payments of their business with much ease.
Conclusion
Bank reconciliation is an important financial activity that maintains the accuracy and consistency of a company’s financial records. It entails comparing a company’s bank statement to its internal data in order to find anomalies or inaccuracies.
This procedure assists in identifying and correcting errors, detecting fraud, and providing a comprehensive picture of an organization’s financial status. Bank reconciliation outsourcing has various advantages, including access to specialised expertise, cost savings, operational efficiency, and improved data security. Outsourcing companies use qualified accountants, which reduces human mistakes and increases efficiency.
Furthermore, outsourcing companies follow strong data security measures, assuring the safe handling and storage of sensitive financial information. Overall, outsourcing bank reconciliation helps organisations to focus on core operations while delegating this crucial financial process to qualified outside personnel.
If you’re ready to begin your outsourcing journey, eDataIndia can assist you with your business needs and provide you with the Strategic Advantage you need to beat the competition. Talk to us today to learn more about how global offshore outsourcing might benefit your business and future growth.
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