Reconciling your company bank accounts every month is essential, just like reconciling your personal bank account. This method matches your credit card transactions with your bookkeeping records. It is a crucial step to ensure that credit card statements are accurate, and if there are any discrepancies, it helps the business owner take necessary action.
Reconciling your credit card statement every month helps to guarantee that:
- We resolve any discrepancies between your credit card statement and bank account, such as a bank deposit with the wrong amount.
- You will promptly address fraudulent activities or theft from your card and account. For example, if you see a purchase list on your disapproved statement, you can inform your bank to investigate the case.
What is the Process of Credit Card Reconciliation?
When the credit card statements are received, accountants match every transaction on the statement with the company’s internal system. It includes both inbound credit card payments from customers and outbound transactions to suppliers and service providers.
If there are any discrepancies, take the proper steps to investigate the case. After performing all the research and gathering information, store this data for audit purposes.
How Credit Card Reconciliation Software Works
Credit card reconciliation software automates all the required steps in the process. It imports data from ERP or general ledger systems and credit card files or statements. Then, the software compares both files and looks for any discrepancies the accounting team needs to investigate.
It makes credit card reconciliation easier as you don’t have to match each transaction manually, and this whole process also speeds up.
How to do Credit Card Reconciliation?
Step 1: Get all the transactions of a credit card
The first step is to obtain all your company’s various credit card account transactions. You can do this by importing credit card transactions using software or manually uploading bank statements into your accounting software. We highly recommend importing these transactions using software instead of manually doing it for more accurate results and to save you time.
Step 2: Assign expenses to a specific employee or team
First, sort out all of your company’s costs and then decide which employee or group will be responsible for various aspects of your company.
Step 3: Gather and arrange data for various expenses
This step requires you to collect important documents, reports, receipts, and credit card statements. It can be a difficult and time-consuming process. After that, you must arrange data per your company’s requirements.
Step 4: Compare the transaction amounts on expense receipts with the outgoing quantity in the corresponding account
Now is the time to validate your expenses. Thoroughly check all your company’s expenditures and ensure they comply with your spending policies to prevent fraudulent activities or mistakes that could lead to potential legal woes.
Step 5: 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 engaging in such activities in the future. A simple conversation will help to clear up any misunderstanding and to help the future reconciliation processes.
Step 6: Process credit card transactions in the general ledger
Now that you have sorted out all the expenses and addressed any potential issues, it is time to add your transactions to your company’s public ledger.
Validating and addressing issues before adding expenses to your books is essential to ensuring that the general ledger remains a solid and accurate foundation for your company’s financial system.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
