Account Reconciliation: A Beginner’s Guide for Mehasa Consulting

To a small business owner, account reconciliation is perhaps the most critical thing in order to ensure a good health check in financial matters. This might not be one of the interesting tasks while running a business, but completing it at an appropriate time period will keep accounts accurate and safe. Account reconciliation helps match the financial records to prevent discrepancies and fraudulent practices while keeping off problems such as overdrafts and mismanaged transactions. In Mehasa Consulting, it is very essential for transparency and regulatory compliance.
What is Account Reconciliation?
Reconciliation of accounts makes sure to examine two different sets of financial statements, thus ensuring they match. By balancing your general ledger to records external to yours, as done in the illustration above-by balancing your company’s bank statement or third-party invoices-insures that all financial balances have occurred and are hence accurate. Only after completing every accounting cycle will this action be taken so again, like before, making sure the books are intact and free from errors.

In simple words, if ever a charge is found on his bank statement for some purchase he never made or some discrepancy between cash records and the bank balance is found, then account reconciliation is the process that would reveal those discrepancies and rectify it.

Importance of Account Reconciliation for Mehasa Consulting
Account reconciliation is considered necessary for a consulting firm like Mehasa Consulting due to several reasons.

This leaves all the other bank and all manner of other receivable and payable accounts to remain balanced, correctly reflecting the numbers within financial statements.

Avoiding error and fraud: Often discrepancies in your company’s ledgers point out to any errors, fraud, and unauthorized transactions. Reconciliation will often help spot problems and fix them before spinning it into anything terrible.

Reconciliations of accounts help cash flows to ensure that each kind of transaction is up to date to keep the cash flows smoothly running. In addition, in consultancy industries, if any discrepancy occurs in finances during consultancy work, reconciliation with other parties will help achieve all tax compliance and possible auditing requirements.

Steps in reconciliation
Reconciliation can seem to be quite complex initially, but when approached step-by-step, it is quite manageable. These are the steps that Mehasa Consulting should take for successful account reconciliation:

1. Completion of Your Bank Reconciliation
Bank reconciliation is the very first and most important part of the reconciliation process. It is a comparison of your general ledger with your bank statement to confirm if they are in tandem with each other. You must account for everything that does not agree, including outstanding checks or deposits. Accounting software makes this easier as it automatically matches transactions, but if you don’t have software, you can build a reconciliation form so you can compare these two sets of records manually in your books.

2. Check Your Cash Balances
The cash balance on your company’s books does not always agree with that shown on your bank statement. Service charges and bank fees can create differences in it, as well as some recording errors of deposits and withdrawals. It is crucial to recognize these differences and appropriate the necessary adjustments in your books for the right cash balance.

3. Adjusting Journal Entries
The journal entries follow all your business transactions, and this includes debit and credits. If there is no agreement between the cash records in your ledger and your bank balance, there could be a problem on the side of the journal entries. For instance, NSF can cause a non-sufficient fund check to mismatch cash records from the bank balance. Ensuring the journals are right will correct the books.

4. General and Sub-ledger accounts reconciliation
If you’re using accounting software, this step may be automated. However, if you’re manually managing accounts, reconciling the general ledger with sub-ledgers (such as accounts receivable or accounts payable) is essential. This ensures that individual account balances match the totals in your general ledger, ensuring consistency across your financial records.

5. Analyze Previous Trends
One of the most helpful practices in reconciling is to go through past trends in your trial balance. Here, you can spot unusual transactions or trends that may indicate an error by comparing current and past balances. This may also help identify recurring issues that need to be addressed to prevent future discrepancies.

6. Check Updated Trial Balance
Final Check – All adjustments should have been accounted for and the trial balance must reflect the correct financial information. Make sure everything matches your accounts as reported on the trial balance, and all differences have been cleared. At this point, you can be sure your financial statements are accurate and ready for reporting.
Timeliness is of the Essence
For companies like Mehasa Consulting, reconciliation should be done regularly to stay on top of finances. Though it is quite monotonous, reconciliation within the time frame, which should ideally be done at monthly intervals, helps catch the discrepancies before they mushroom into big problems. The regular reconciliation ensures that financial records are accurate and keeps one better prepared for audit, tax filing, or making financial decisions.

Ease reconciliation with accounting software
The installation of accounting software could make all the manual account handling easily reconcilable . Automatic bank feeds and report generation and monitoring outstanding transactions could help keep one organized and on top of things without misleading or miscalculating anything.

To Mehasa Consulting, these software applications will reduce reconciliation time a great deal and keep it quite efficient with an error-free process.

Conclusion
Account reconciliation isn’t glamorous practice, but that is the way it could be to go a long distance to ensure your financial records staying intact. Mehasa Consulting, a firm of consultants needs accurate and reliable financial report to build trusts with clients to meet some regulatory requirements so that their business will remain running successfully. Proper reconciliation process paired with accounting tool will maintain the books up to date, avoid pricey mistakes along with financial security and transparency with the books.