Tag Archives: banking

Analyzing your Bank Statement On a Daily Basis

How many business owners take out the time to review and analyze their bank statements, daily? When we perform accounting tasks we basically record data from the bank statement and perform reconciliation to our cashbook or ledgers.

Evaluating transactions on a bank statement is a completely different exercise from accounting for the respective items. Businesses lose thousands, due to failure to review the transactions on their bank statements, regularly.

Payments When payments are reconciled, we compare amounts in our books to transactions on the bank statement. The payments however have to be verified as well. A discrepancy will be identified immediately when our numbers differ from the statement amount, which is one objective of the bank reconciliation. But what if the amount agrees with the bank statement, but the check was never verified. A bookkeeper or admin person could have just slipped the check under your nose, and you could have inadvertently signed the check, without really authorizing it. This happens, especially for a range of small checks, (a huge amount will catch the signatories attention immediately) and where various people deal with preparing the check, and the owner only signs.

Standing orders and bank charges How many “deductions” on a bank statement go undetected? Anyone who gains access to your bank account details can draw on your account. The culprits range from legitimate companies to con artists. Big companies sometimes commence deducting amounts prior to the agreed date. On many occasions standing, debit or stop orders, are not even signed, but amounts are withdrawn. Experienced business owners will deal with such problems immediately, but others will overlook this sad state of affairs. Stop and reverse payments at your soonest. Scams are the other strategy employed by many crooks to extract cash out of your accounts. Fraudulent e-mails by people purporting to be from the bank, requesting a verification of your bank details and passwords, if you use Internet banking. If an account number (and password) is supplied, huge amounts can be withdrawn, and by the time, you identify the problem, it could be too late.

Bank charges If use Internet banking, a bank is not supposed to levy balance or statement enquiry fees. Banks tend to charge for the silliest of items. Loyal bank clients are entitled to a substantial reduction of bank charges. When you see those huge bank charges contact your banker. Also verify whether your bank is charging interest, when a loan or overdraft facility on your account is not in place..

Deposits A common scam worldwide is the “mistaken” deposit of huge amounts into innocent business account. The crooks than call to demand a refund of this amount, and their mistaken deposit will bounce, leaving the business cash strapped, if they refunded. A further problem, is that they also possess you bank details, and can withdraw amounts. Know your customers, and have proper arrangements for payment. Insist on referenced deposits only.

The only way, you will stay abreast of your cash is to review your bank statements daily. Preferably on an Internet site. Printouts at tellers could be a costly affair. Remain vigilant and you could save your business substantial sums.





 the Author
Sean Goss

How to reconstruct a Bank Statement

A challenging part of accounting can be the bank reconciliation. To some bookkeepers recons are fun, to others, it is nothing but a tedious bore. Whatever way we look at it, it is a function of accounting that must be done. Checks that are processed late, can bounce, if ample provision for it has not been done in the books of the business. But recons, or “check book balancing”, is equally important to none business people.

The bank recon is simply the “marrying” of a balance on a bank statement, on a given date , with the balance in your cash book.

Bank charges are added to cashbook payments, outstanding check are deducted, and outstanding deposits are added. Standing or debit orders are added to payments and hopefully the balances will agree. Business should budget for payments from cash book balances, not bank statement balances.

Many numerate people have a grasp of bank reconciliations to some degree. There are occasions that bank reconciliations cannot balance. And this could be ascribed more to missing information, than the skills of the person performing the recon. In such instances the banks statements have to be reconstructed.

A bank statement for a particular period could consist out of several pages depending on the size of the entity concerned. If one page is missing, the reconciliation will not balance. Transactions on the missing page obviously impacts on the outcome of the bank recon.

What if you aware a page is missing, and is in no position to contact the bank for fresh statements. Banks normally archive, statements older than 6 months, and it could cause delays, when copies are requested.

Herewith some guidelines on reformatting your bank statements.

* Check the sequence of the bank statements.

* If a statement is indeed missing, the closing balance, on one page, would differ from the following statements opening balance. Calculate the difference.

* If a difference has been established, scrutinize your check book stubs, to tie that amount to a check number not identified on the statement.

* Verify, recurring payments, such as standing orders, for prior months, and check if that amount cannot be linked to the missing information.

* List all payments, you have the checks stubs, and standing order amounts.Lists all deposits.Add deposits to opening balance. Deduct all payments and compare to final balance. The variance could be unrepresented checks, or bank charges.

* Some bank statements give precise detail on how many checks were processed and the total amounts on the first page. This simplifies the process.

Bank reconciliations can turn out to be challenging, but fun.


Author: Sean Goss  sgafc@mweb.co.za