I’m often the first person outside of a business that gets to see the bookkeeping once the owner is tired of worrying about it and ready to get some help.  At that point, things are usually pretty bad, but nothing is ever so bad that it can’t be fixed.  And there’s one thing that I find in almost every set of DIY books – the accounts have never been reconciled.

What Reconciliation Actually Means (In Simple Terms)

The word “reconciliation” can sound and feel like technical accounting jargon, but it’s just a long word for a simple process.  At its core, reconciliation just means making sure your bookkeeping records match exactly what’s on your bank statement by comparing the two sets of data line by line and catching anything that’s missing, duplicated, or incorrect before you move on to the next month. 

And here’s a fun fact that might surprise you. If you’re using QuickBooks with a connected bank feed, the process is already more than halfway done before you even start.  Transactions that came in through the bank feed are pre-marked as cleared, which means on average, about 97% of reconciliations balance out correctly without any changes at all.  All you’re really doing is just confirming what QuickBooks already suspects is true. 

This Matters More Than You Think

I can’t imagine anyone saying that they’re fine knowing their bookkeeping is incorrect or okay with being unsure. You need to know things are right, and the only way to actually be confident in that is to reconcile regularly. Because when accounts aren’t reconciled:

• Your reports are wrong, which means every decision you base on them is wrong too.
• You might be missing expenses, which means you’re overstating profit.
• You could have duplicate income entries (the 2nd most common mistake I see), which means your profit is incorrectly inflated.
• And that all boils down to overpaying in taxes and having zero confidence in how your business is operating.  

And honestly, underneath all of that is just a lot of stress.  Stress that follows you home, peppers your time with family and can impact your health.  Stress that is avoided by doing this simple monthly process. 

This Comes Up A Lot

A lot of business owners skip this step because:

• They’re too busy, so it keeps getting pushed to the back burner.
• They don’t even know it’s part of a sound bookkeeping workflow.
• They’re not totally sure how to do it, so they don’t even try.
• Or things already feel a little too messy and they don’t know where to turn for help. 

If any of that sounds familiar, I get it.  I’m a business owner too, and I know firsthand that trying to find spare time, competent help, and a few brain cells that still work is exhausting.  

But I can tell you from experience: the peace of mind and incredible sense of accomplishment when you successfully reconcile your first month’s bank statement makes everything worth it.  No more worrying.  No more second-guessing.  No more stress following you home.  

I’ve Designated June as “Reconciliation Month”

Sometimes you just need to cut yourself some slack and give yourself permission to reset.  Maybe you didn’t know about reconciliations or you didn’t know where to start.  That’s absolutely ok and I’m glad I could help you understand why it matters.  Now you can get one step closer to trusting your numbers again.  

I’m dedicating a whole month to reconciliations because it’s such a critical step that’s so often missed.  And because sometimes a reconciliation needs a little extra attention to get balanced.  So stay tuned, bookmark this page and come back for the next Reconciliation post.  Or better yet, sign up for my newsletter and you’ll be notified as soon as the posts are published.

In upcoming posts, I’ll share:

• Which accounts need to be reconciled and how often
• How to do your first reconciliation when the starting balance is not correct. 
• How to troubleshoot an unbalanced reconciliation and why you should never force it to balance.
• How to use the reconciliation status to better understand your current and upcoming transaction activity.

Because once this is dialed in, everything else gets easier.

The Bottom Line

If your numbers don’t give you any confidence, one of the first places I’d look is your unreconciled accounts. Getting reconciled gives you clarity, and clarity makes everything else in your business easier, including decisions that actually keep it moving forward.  

Ready to get started?

If you’re looking at your books thinking “where do I even start,” that’s completely normal. No question is too small.  Reach out, and we’ll figure it out together. 

And stay tuned, because next up I’ll walk you through exactly how to get started, even if your accounts have never been reconciled and you’re not sure where the beginning even is.