As a business owner, you must understand the importance of reconciling your accounts—and no, not just your checking accounts!
Do you know what accounts you need to be reconciling regularly? Read on to find out from Larry Chester, President of CFO Simplified.
Do You Know What Business Accounts You Must Reconcile?
Larry Chester speaks with business owners all the time about their month-end close. The first question he asks them is, “When was the last time you reconciled your checking account at the bank?”
To which most say proudly, “Well, we do that every month!” Some business owners, however, disclose that they haven’t reconciled their checking accounts for several months—and that’s the problem.
Then, the second question comes: “What other accounts are you reconciling off of your balance sheet? When was the last time you reconciled other important balance sheet accounts?”
Larry says that typically, business owners look at him with strangely and say, “Well, I don’t know what you mean…”
Let’s discuss what other accounts must be top of mind as a successful business owner.
Your Checking Account Isn’t the Only Important Account!
Various other accounts are just as critical as your checking account when it comes to understanding your business financials.
These accounts include:
All of these accounts must be reconciled regularly.
“If you pull an inventory value report, does the amount of the inventory that’s on that report match what you’ve got in your general ledger?” asks Larry. “If it doesn’t, you’re in real trouble, and the same thing’s true of all those other accounts as well.”
His advice? “Don’t just sit idle and let your accounts sit idle as well.”
Why Do These Accounts Need To Be Reconciled?
But why should these accounts be reconciled every month?
Because if you’re not reconciling those accounts, your financial statements aren’t any more accurate or more reliable than a roll of the dice. “That’s a terrible thing to depend on to make the decisions you need to make to run your business,” says Larry.
What Can You Do?
So, you’re a business owner who has this new information about needing to routinely reconcile these accounts… But perhaps you don’t know where to start. Or, maybe you don’t have the bandwidth to do this yourself every month.
An outsourced CFO is a great solution for you. Read on to see if your business is ready for a part-time CFO.
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