Sunday, October 2, 2011

Bank Reconciliations

One of the worst habits to get into when doing your bank reconciliations, is failing to carefully examine each entry to ensure the PCLaw entry exactly matches the bank statement.

If you are a small practice, you can sometimes get away with looking for a $500.01 entry and checking off $500.10. If you have a hundred or more entries each month, this short-cut method creates much more work than the time it saves. There is nothing more frustrating than checking off all your entries and finding the balance is out by $0.09. You now have to go back and start over, re-examining each entry to find the error.

Instead, take the few seconds needed to check that the numbers the teller entered are exactly the same as the entry in PCLaw. Correct any errors as you find them. You will quickly find that by using this system, your last checkmark consistently result in a balanced account.

Tricks to aid you in the bank reconciliation process:
  1. Deal with bank errors immediately – inform the bank or correct in PCLaw as needed.
  2. Use the sort function – by clicking on the headings at the top of the columns. If you are having trouble finding an entry, sort by amount. To find a cheque, sort by cheque number. You can also sort by checked/unchecked entries.
  3. Use multiple sorting. First sort by date, then by unchecked/checked.  The unchecked items will be grouped together, and sorted by date. Sort by amount then by unchecked/checked. The unchecked items will be grouped together, and sorted by the amount.
As always, I invite your comments and suggestions for future post topics. Next week – No cost error evaluation.