A Simpler Approach To Bank Reconciliation

Bank reconciliation is an essential part of the bookkeeping process for any business. It’s also time consuming, demands complete concentration to avoid mistakes, and honestly? It’s really dull.

Fortunately, times have changed. Out-of-date bank reconciliation checks can be replaced by a more efficient automated process. In this article we explain why bank reconciliation is important, and what you can do to make the process faster, easier, and with fewer mistakes.

What is bank reconciliation?

Bank reconciliation is the process of comparing bookkeeping records with bank transactions in order to make sure that they match.

Why do I need to reconcile my bookkeeping and bank accounts?

It’s vital to ensure that your records are accurate, up-to-date and complete. Reconciling your bank accounts is an important step in that process, because comparing your accounting with your banking records helps to identify any discrepancies. For example, you might pick up transactions which were overlooked when you first entered your data, or even identify instances of fraudulent activities.

But reconciling your bank accounts and bookkeeping isn’t just useful for the day-to-day running of your business.

The information that you enter on any tax return for your business comes from your bookkeeping records. If those records are missing transactions or have errors, then the amount you report to HMRC might be wrong as well. Horrors.

But what’s the best way to manage the bank reconciliation process?

Traditional bank reconciliation

Traditionally, reconciling two sets of data against each other is a horribly time-consuming process of line-by-line manual checking, which can quickly get confusing if you have multiple transactions for the same amount.

The other problem with humans doing work like this is that we’re human. Our minds wander, the phone rings, we need a cup of tea.

If there are hundreds of transactions to get through, then there’s a fair chance of being distracted and missing something. You might think you’ve checked everything, but there could still be discrepancies in the data, and therefore errors in the bookkeeping. Fortunately there are better solutions available.

Bank reconciliation done differently

Accounting software providers (yep, like Pandle!) have been able to develop bank feeds which connect your bookkeeping to your bank accounts. Once connected, information about each transaction automatically flows into your accounts records in real-time.

Though the information is coming directly from the bank, there are still some bookkeeping software providers that continue to ask users to reconcile the imported transactions. This means that:

We knew that it was safe to remove that extra unnecessary step in Pandle. To us, it just didn’t make sense to spend additional time comparing each transaction with the bank, when you’re importing your bank statements anyway!

It means our users can go straight on to the confirmation process, categorising transactions as sales, expenses, customer receipts or supplier payments. That way, you’re spending less time on the process, and reducing the potential for errors in your bookkeeping.

What if bank feeds aren’t supported for my bank?

If your particular bank isn’t supported for bank feeds (and you can check if Pandle supports your bank here), all is not lost.

You can also use a bank import to transfer transactions to your records in bulk. In our case this just means downloading a CSV file from your bank, then uploading it into Pandle.

In Pandle we also have PayPal Feeds and Stripe Feeds, so that you can connect those payment platforms to your bookkeeping records too.

Automate the way you confirm transactions

Assigning and categorising transactions is another essential aspect of bookkeeping. It helps us keep track of who’s paid, who needs to, and how the business is performing financially. It’s also key to making sure the correct amount of VAT or other taxes gets paid to HMRC.

But yes, confirming transactions can be another time-drain, important thought it is. Thankfully the tech replacing manual bank reconciliation also helps businesses ease some of their administrative burden by automating the confirmation process, too.

In Pandle we call them Bank Rules. Users can enable Pandle to automatically categorise transactions and assign tax codes, so that they don’t have to spend time performing checks.

Another win for time-saving efficiency means more time to focus on other things. Phew.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.