It is truth that a bank reconciliation helps control cash because through bank reconciliation, we find all the reasons of not matching our cash book and bank statement. There are some cheating which we can fastly find by making bank reconciliation statement.
For example, if we have given cash to employee for depositing in company's bank account.We have recorded in the cash book. But we find that actual cash in bank as per bank statement is less because that employee has consumed same cash for his personal use without telling to authority of company. It is just sample, there are lots of reason which we can find through BRS. So, our cash will be utilized as per our budget. We will not face the negative variance in it.
Following are the main Way Controlling Cash through a Bank Reconciliation
For example, if we have given cash to employee for depositing in company's bank account.We have recorded in the cash book. But we find that actual cash in bank as per bank statement is less because that employee has consumed same cash for his personal use without telling to authority of company. It is just sample, there are lots of reason which we can find through BRS. So, our cash will be utilized as per our budget. We will not face the negative variance in it.
Following are the main Way Controlling Cash through a Bank Reconciliation
1st Way : Control the Overcharge by Bank
You often see that bank charges will be over than Indian bank regulation. It may be due to mistake. So, with this, your cash at bank will be less. So, you can stop this mistake, if you find that main reason of not matching is overcharges. You can file the appeal to reduce the overcharges.
You often see that bank charges will be over than Indian bank regulation. It may be due to mistake. So, with this, your cash at bank will be less. So, you can stop this mistake, if you find that main reason of not matching is overcharges. You can file the appeal to reduce the overcharges.
2nd Way : Correction of Bank's Accounting Mistakes
You often see, when you go to ATM, you want to withdraw Rs. 5000, but you get nothing but your slip shows that you have withdrawn the Rs. 5000. This is bank mistake. So, you can ask bank for this. I am telling this information just for example. Bank employees are also human. Suppose, you deposited Rs. 10,000 but bank did not record in its book. So, your cash at bank will be less with Rs. 10,000. Through bank reconciliation statement, we can find this and take action against bank.
You often see, when you go to ATM, you want to withdraw Rs. 5000, but you get nothing but your slip shows that you have withdrawn the Rs. 5000. This is bank mistake. So, you can ask bank for this. I am telling this information just for example. Bank employees are also human. Suppose, you deposited Rs. 10,000 but bank did not record in its book. So, your cash at bank will be less with Rs. 10,000. Through bank reconciliation statement, we can find this and take action against bank.
3rd Way : Correction of Company's Accounting Mistakes
One day, I go to ATM and see that it is showing just Rs. 2000 but my cash at bank was very large. I has made my bank reconciliation statement. Difference was of Rs. 40,000. I am thinking, where went my Rs. 40,000. I am fearing whether my online bank account has been hacked. But, again I think and I am confident that it can not be hacked because, I use full precaution against this. So, I checked all my one month's vouchers and I found that there are lots of vouchers of expenses which I did not record. So, due to my accounting mistakes, I am thinking wrong. So, you can imagine the business of company. There are lots of accountant. If any accountant does any accounting mistake, cash book and bank statement will not be matched. So, we can find fastly all these mistakes after making bank reconciliation statement.
One day, I go to ATM and see that it is showing just Rs. 2000 but my cash at bank was very large. I has made my bank reconciliation statement. Difference was of Rs. 40,000. I am thinking, where went my Rs. 40,000. I am fearing whether my online bank account has been hacked. But, again I think and I am confident that it can not be hacked because, I use full precaution against this. So, I checked all my one month's vouchers and I found that there are lots of vouchers of expenses which I did not record. So, due to my accounting mistakes, I am thinking wrong. So, you can imagine the business of company. There are lots of accountant. If any accountant does any accounting mistake, cash book and bank statement will not be matched. So, we can find fastly all these mistakes after making bank reconciliation statement.
4th Way : To Find Invalid Cheques
Sometime, bank will not deposit the money of cheque in our bank account because other bank did not accept our cheque. For example, it was worn. But we have increased our bank balance in our cash book and make the planning to buy anything. But soon, when we have made the bank reconciliation statement, we find this mistake. After this, it will be easy for us to adjust our cash planning according to updates before buying anything.
5th Way : Auto-Payments
Sometime, bank will not deposit the money of cheque in our bank account because other bank did not accept our cheque. For example, it was worn. But we have increased our bank balance in our cash book and make the planning to buy anything. But soon, when we have made the bank reconciliation statement, we find this mistake. After this, it will be easy for us to adjust our cash planning according to updates before buying anything.
5th Way : Auto-Payments
Sometime, due to auto-payments by bank on the basis of your past agreement, your cash balance may not be matched with bank bank statement. So, check your past agreement with bank.
In End, I will say some tips for better control your cash with bank reconciliation
In End, I will say some tips for better control your cash with bank reconciliation
- Whether your business is small or big, you must make bank reconciliation statement.
- Never ignore small signals of errors. Prevent it fastly.
- Enables to stop cash outflow when you see less cash at bank as per bank statement.
- Verifies the total of cash book and bank statement.
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