Bank reconciliation is important in managing a bank account. You shouldn't rely solely on your online bank statement to track your account activity. Reconciliation is a very simple task if you make it a habit to keep accurate records of your withdrawals and deposits. At regular intervals, you simply sit down with your records and make sure they match those of the bank. A bank reconciliation statement is especially important for businesses to ensure there is accurate accounting of their finances.
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Account for Pending Transactions
Reconciling your bank statement is important in the event you have transactions that have not yet posted to your account. For example, if you only rely on the online tracking, and you forget that you wrote a check, you could be operating on the assumption that you have more money than you do. This could lead to denied payments, overdraft fees or other surcharges.
Account for Bank Fees
Not only is relying solely on the online statement a bad idea, it's also a bad idea to rely entirely on your records. Some bank accounts have fees or surcharges and if you don't reconcile the statement, you may forget to add them to your records.
Detect Errors and Fraud
Always consider human errors are fraud. If you don't reconcile your bank statement, you may miss errors or fraudulent charges. For example, you need to verify there are no double charges for a service, or that no one has compromised your debit card number and used it for fraudulent charges. Overall, it is a big advantage to reconcile your bank statement to assure you and the bank are on the same page.
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