It is important to reconcile your company’s bank accounts every month, just as you reconcile your personal account. This involves matching your credit card transactions with your bookkeeping records to ensure that credit card statements are accurate. Reconciling is a crucial step that helps business owners identify any discrepancies and take necessary action.
Reconciling your credit card statement every month helps ensure that any discrepancies between your credit card statement and bank account are resolved promptly. For example, you may notice a bank deposit with the wrong amount, fraudulent activity, or theft from your card or account. If you see a purchase on your statement that you did not approve, you can inform your bank to investigate the issue.
How to Reconcile Your Credit Card?
When the credit card statements are received, accountants match every statement with the company’s internal system. It includes both inbound credit card payments from customers and outbound transactions to suppliers and service providers.
You can take proper steps to investigate the case if there are any discrepancies. After performing all the research and gathering information, this data is saved for audit purposes.
Is There Software to Help With the Process?
Credit card reconciliation software automates all the required steps in the credit card reconciliation process. It imports data both from ERP or general ledger systems and credit card files or statements. Then, the software compares both files and looks for discrepancies so the accounting team can investigate them.
It makes credit card reconciliation easier as you don’t have to match each transaction manually, and this whole process also speeds up.
Steps to Reconcile Credit Card
- Get all the transactions of credit cards: The first step is to obtain all the transactions of your company’s various credit card accounts. You can do this by importing credit card transactions with the help of software or manually uploading bank statements into your accounting software. For more accurate results and to save you time, we highly recommend importing these transactions with the help of software instead of manually doing it.
- Assign expenses to a specific employee or team: First, sort out all your company expenses and then decide which employee or team will be responsible for various fees in your company.
- Gather and arrange data for various expenses: In this step, you must collect important documents, reports, receipts, and credit card statements. It can be a difficult and time-consuming process. After that, you must arrange data as per your company’s requirements.
- Draw comparison: Compare the transaction amounts on expense receipts with the outgoing quantity in the corresponding account. Now, this is the time to validate your expenses. Thoroughly check all the costs that took place by your company and ensure they comply with its policies. It will help prevent fraudulent activities or mistakes that could lead to legal woes.
- Discuss any policy violations with the offending party: If you notice any policy violations in your company, it is crucial to address them immediately. Discuss them with the offending party to know whether it was a mistake or some fraud activity. It rarely happens, but it is essential to highlight the issue to prevent the company from such activities in the future. A simple conversation will help to clear up any misunderstanding and to help the future reconciliation processes.
- Process credit card transactions in the general ledger: Now that you have sorted out all the expenses and addressed any potential issues found, it is time to add your transactions to your company’s general ledger.
To ensure that the general ledger remains a solid and accurate foundation for your company’s financial system, it is essential to validate and address issues before adding expenses to your ledger.
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