Outsource Account Reconciliation to Minimize Financial Discrepancies
Account management has always been a pain area for entrepreneurs, especially for start-ups or small scale enterprises. Small business owners often juggle between core business operations and non-core tasks. Therefore, as it normally happens, start-ups often put certain non-core, yet critical tasks such as bookkeeping, payroll management or account reconciliation, on a back-set. However, they hardly realize that by doing so, they are apparently affecting their overall financial operations, in a very adverse manner. For instance unreconciled bank statements often result into fraudulent activities and other such malpractices. Usually, it is seen that small business owners overlook bank statement reconciliation which needs to be done at periodic intervals. This eventually adds up to the pressure on regular credit requirements and even impacts operational efficiencies. It eventually leaves a huge fissure between actual and projected financial position.
This is the reason why bank reconciliation is considered as a vital component that ensure smooth account management. In fact it is even an important MIS, when submitted; stakeholders can monitor financial standing of the company, at any point of the time.
How ignoring account reconciliation hampers operational efficiencies? To understand this, let us take an instance – if a company receives a check from one of its clients, but fails to deposit it in the bank, on time. While the check has still not gone for clearance, the account receivable in the books is deducted. This, in turn, gets reflected on the office records and thus the office records shows inflated amount. Now, based on this information, a check gets issued to the vendor, who immediately deposits in the bank. Since, there are no adequate funds in the bank to cover it, the business faces dire consequences including legal implications. Besides, legal and monetary implications, the business even suffers a serious damage to its reputation, as it overlooked reconciliation and updating the bank statements at regular intervals. Outsourcing account reconciliation is the solution Usually, bank reconciliation statements are prepared once every month, since it takes the same time for bank to issue accounts statement. This process is generally cumbersome and time-consuming, for several small-business owners, as by the time they complete the process, another set comes up. Therefore, it is always recommended to outsource bank statement reconciliation to a professional service provider. Outsourcing it to professionals adept in handling accounts reconciliation helps the entrepreneurs to focus on other core business areas. Outsourcing account reconciliation helps business to achieve optimum operational efficiency and even manage their financial records, as they reconcile bank statements on a regular basis, but managing it is a challenge for the in-house team, along with other core business activities.
Other benefits of outsourcing account reconciliation: Optimized accounts books - Regular account reconciliation can give you a complete picture about the finances, instantly. Since, every outward and inward remittance records are accounted for, it further enables you to carry on with the operations, smoothly and without any glitches. Moreover, it even provides an accurate insight into other financial nuances like accounts receivable and accounts payable.
Quick rectification of any discrepancies - By constantly keeping a tab on the entries done in cash books and bank statements, outsourcing companies can easily and quickly identify as well as rectify any inconsistencies. It is been observed that several companies who prefer to carry on reconciling work in-house, delays it, and invite unwarranted problems.
More focus on core areas - Even though bank statement reconciliation is a very crucial task, it is not feasible to deploy a key resource to execute it. Since, it is not viable to waste precious resources which can be better used to devise key business policies and future financial plans; outsourcing comes as one of the most practical option. Conclusion It is no secret that an organized and well-maintained bank statement plays a very crucial role and offers a complete picture of the overall monetary condition. It should not be compromised, since it may result into dire consequences. Therefore, it is always advisable to partner with a professional financial outsourcing company. This original article was published on https://www.linkedin.com/pulse/outsource-account-reconciliation-minimize-financial-vaibhav-devaansh
