Reconciling our Differences

Looking up the definition of reconcile, one will find synonyms like resolve  or check, as in, resolve the difference or check the differences. When it comes to reconciling an account in QuickBooks, those definitions don’t go far enough.

If I had a dime for every time a QuickBooks user told me they “reconciled” their bank/credit card accounts, I’d be rich! On the other hand, if I had a dime for every time they did it correctly, I’d be broke. Come to think of it, I darned near am broke! You’re probably asking yourself, what is he talking about? Well let me spell it out.

In QuickBooks reconciling an account goes beyond resolving the differences between the account register and the bank statement.  Once all the transactions have been identified/matched between the QuickBooks account register and the bank/credit card company’s statement, you’re only part way there. It’s necessary to “record” the balance you reconciled so any accidental changes/adjustments to cleared transactions become obvious by changes in this balance.

To do the job properly in QuickBooks, it’s necessary to go to the “Reconcile” screen and after entering the closing date and ending balance from the bank statement, begin “clearing” matched transactions. Clearing or checking off matched transactions in the reconciling screen is an integral part of resolving the differences. Clearing the transactions identifies it as having been verified to a transaction on an actual bank/credit card statement. This insures that the transaction not only is accurate but also that it has not been duplicated. Transactions on the bank statement not appearing in the QuickBooks reconciling screen, should be added to the QuickBooks account register and cleared. This keeps the process in balance.

And now for the crème de la crème, remember that ending balance from the bank statement you entered in the beginning of the process? The QuickBooks reconciling screen has been tracking your efforts at clearing transactions and the results are displayed in the lower right corner of the screen. See the “Difference” amount? If you did your job well, the amount will be zero. You can now click on the Reconcile Now button. This records the reconciled balance as next month’s beginning balance and if it changes, you know someone or something has “unreconciled” your previous work. You can’t get that kind of reconciliation protection by simply resolving/checking  the transactions against one another visually or on paper.

So folks, give an old beancounter a break. Reconcile your bank and credit card accounts through QuickBooks the proper way to insure the accuracy of your balances. Reconciling by any other means is simply “checking” your accounts and it don’t get me any further away from broke.