Reconciling bank accounts is critical to ensuring the accuracy of your company’s accounting records. The primary purpose of a bank reconciliation is to confirm that the transactions recorded in your bank statement match those shown in your accounting records.

Generally, bank accounts should be reconciled at least monthly. However, conducting weekly or daily reconciliations for accounts with a high volume of transactions can help uncover accounting errors and fraud quickly. Here’s a list of five common mistakes to avoid when reconciling bank accounts in QuickBooks® software:

1. Reconciling infrequently. When too much time elapses between reconciliations, it can complicate the process. Stale, undetected errors can create significant weaknesses in your financial records. It may also be harder to investigate discrepancies as memories fade regarding the specifics of unreconciled transactions.
2. Not reviewing every transaction. It can be tempting to skip smaller transactions to expedite the reconciliation process. Reconciling every transaction, however small, ensures the accuracy and integrity of your accounting records.
3. Relying exclusively on bank records. While QuickBooks allows users to import bank transactions, assuming every transaction is legitimate and accurate can be a mistake. For example, check payments issued to suppliers should match their invoices. Reconciling payments to source documents and bank records can uncover errors by financial institutions that processed the payments or alterations of the checks by the recipients, for higher amounts.
4. Routinely creating accounting entries to adjust for differences. Differences may arise despite your best efforts to reconcile transactions in QuickBooks with those shown on your bank statement. The software can create an entry to adjust for the difference. Use caution, as adjusting unreconciled balances can mask errors and fraud.
5. Not accounting for outstanding checks and deposits. Failure to keep track of checks and deposits that haven’t cleared or been posted to your account can complicate the reconciliation process. To avoid unreconciled items and the need to adjust for differences, gather unpaid and uncleared transactions before beginning a reconciliation and refer to them during the process.

Reconciling bank and credit card accounts can be time-consuming and tedious, especially if an account includes many transactions or your business operates many accounts. However, allowing accounts to be unreconciled can cause errors to multiply, impacting the accuracy of your financial records. Contact us for guidance on how to reconcile your accounts and how QuickBooks can help make the process more efficient.

As year-end nears, many businesses and nonprofits are planning for 2024. QuickBooks® provides budget and forecast features to help management make financial predictions, as well as assess “what if” scenarios to help make more-informed business decisions. Here’s how you can use these tools for your year-end financial planning.

Budgets vs. forecasts

The budget function in QuickBooks is typically used to manage expenditures during the year to ensure that departments and locations spend according to authorized levels. QuickBooks allows you to create a new budget from scratch. However, budgeted amounts often are based on the prior year with adjustments for new projects and expected growth.

For example, your marketing department’s salaries might be based on the prior year with adjustments for raises (if any). Suppose the department hired a new team member in October 2023. When preparing the department’s 2024 budget, you’d make an adjustment for that individual’s full-year salary based on the prorated amount from the prior year.

The forecast function is used to make projections and perform “what if” analysis. To illustrate, you might run worst, most-likely and best-case scenarios for revenue and expenses for the coming year.

For example, suppose your company plans to build a new facility in the third quarter of 2024, and you plan to finance a significant portion of the cost. Because it’s unclear whether the Federal Reserve Bank will raise or lower interest rates in the coming months, you might run multiple financing scenarios with varying interest rates. You also might vary other inputs, such as expected construction costs and revenue and expenses related to opening the new facility, when you perform your scenario analysis.

How QuickBooks features work

To access these tools in QuickBooks, select “planning & budgeting” from the company menu. A budget or forecast can be created for both the profit and loss statement (also known as the income statement) and the balance sheet. You can increase the detail of a budget or forecast by adding figures at the customer/job or class level (or both).

Each budget and forecast created is saved in a unique file and managed separately. If your organization has multiple departments or locations, you can budget and forecast using QuickBooks classes. If you track job costs, you can even prepare forecasts and budgets for individual jobs.

QuickBooks also allows you to view different sets of reports for budgets and forecasts. You can use these reports to review your entries. In addition, you can view comparisons of how the company’s budget or forecast compares to actual results for income and expenses, classes, jobs or balance sheet account balances.

There are two advanced options to consider when using QuickBooks. One is the cash flow projector; this tool also allows you to determine sources and uses of cash to plan ways to avert projected shortfalls in cash. The second is the business plan tool, which allows you to develop a complete master plan for your business.

Planning in uncertain times

Many businesses are currently facing rising costs, uncertain demand, and labor shortages. In today’s volatile marketplace, preparing reports that plan for the financial future is critical to survival. It’s also important to monitor progress throughout the year — not just at year-end. The hard part is creating the underlying assumptions that will drive your budget or forecast. The easy part is entering the information into QuickBooks. Contact us to help you plan for 2024 and beyond.

 

Other uses for QuickBooks.

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