Who needs and how to prepare a bank reconciliation statement in Australia? As a business owner, you have to be careful about the effectiveness of its cash flow. Preparing bank reconciliation statement is a straightforward way of keeping tab on the cash in or out of your company.

You should be aware that financial discipline is at the heart of every successful business. Be proactive in preserving business’ integrity by regularly updating its financial transactions. Summarising its banking transactions using the bank reconciliation statement allows you to iron out discrepancies in the record-keeping or revealing a fraud.

 

Preparing a Bank Reconciliation Statement

Compare the balance on your business’ bank statement with that on its cash book updated by you. It gives the differences if there are any. It gives you an opportunity to track the reasons for it. Zero difference means your accounting is going in the right direction.

 

Start with Bank Statement

Star with the list of your business’ bank transactions. You can get it by logging-in in your business’ online current or credit card bank account. You may need to refer to statements from both of these accounts. Alternatively, you can ask the bank to send the statement to you.

 

Use an Accounting Software

Your bank may send the data directly to your accounting software. Alternatively, you may have to do the process manually. Refer to the entries on the bank statement and locate reconciliation items in your records in accounting software (cash book or ledger). Next step is to un-select these entries and click on Reconcile Button or option.

Online accounting software systems like One Accounting software generates a bank reconciliation report. Go through it and verify it. Make sure that you have compared all relevant entries. Check, all outstanding or uncleared cheques and deposits in the transit.

 

Balance in a Bank Reconciliation Statement

During the process, go through every financial transaction of the business. Pay special attention to the values, dates, sources, and recipients of the transactions. Take note of cheques that are presented or issued.

You will see that the balance in the bank reconciliation report often encompasses items like bills paid by customers in cash, bank fees & commissions, and uncleared cheques.

 

Finding Reasons for Differences

You can review the bank reconciliation report to find the reasons for the differences in actual balance in the bank statement and that on your cash book or ledger. It is a difficult task. You may need an expert accountant who will process all types of charges and debts during the reconciliation process.

You also need to include the list the reasons in the bank reconciliation report to explain away the differences.

This is all about how to prepare a bank reconciliation statement for a company in Australia. Keep in mind that for a layperson, the task may appear as painstaking and time-consuming. You will be better off with accounting software and a reliable accountant.