Remember the old-school check registers? Some of you may still use them. They were used to keep a running balance in your checking account, recording additions when you made deposits and subtractions when you wrote checks – remember debit cards haven’t existed all that long! At the end of the month, you would get your bank statement and go through your register, checking off those items that cleared the bank and reconciling your balance.
If you’re using QuickBooks for your business – or most financial software packages – you’re essentially using a digital version of this old-school check register. Even though you may not be recording everything in the register itself, the transactions are ultimately getting there. And, just like you’re old checkbook, you need to reconcile your QuickBooks bank accounts each month to your balance in the bank!
Most business owners understand the importance of unreconciled transactions, but many worry about getting the balance to reconcile without knowing what unreconciled transactions may mean to their business.
An unreconciled transaction is a transaction that doesn’t get “checked” off during the reconciliation process. In QuickBooks, you will see these left as bold transactions after you’ve gotten your difference to read “$0”. While it ‘s okay to have unreconciled transactions, you need to review and understand those unreconciled transactions each month to ensure that they don’t require additional follow-up.
Typical Unreconciled Transactions:
- Checks that were written later in the month that hasn’t been cashed by the vendor it was written to. Most checks are cashed within two weeks of issuing them, though some may take longer.
- Deposits that were posted near the end of the month, but weren’t taken to the bank until after the end of the month.
- Credit card deposits toward the end of the month. – If you accept credit card payments from your customers, the credit card processor typically takes a day or two to post the money to your account, so your QuickBooks may show the deposit on the last day of the month, but it won’t actually hit the bank until the next month.
Items to Watch Out For:
- A deposit should clear your bank account the same day that you take it there and credit card deposits within 2 or 3 days. So, if you are reconciling your account and find that you have deposits from more than 2 or 3 days before the close of your statement, you should review to determine why the deposit hasn’t cleared.
- Checks should typically clear within a month of being written, even if the vendor is slow. So, if you have checks that haven’t cleared within a month, you should follow-up with your vendor to determine if they got the payment or if you need to reissue.
- Other transactions, such as payments made by debit card or automatic ACH withdrawals should clear within a day or two of the date of the transaction. If they haven’t cleared, double check to ensure you didn’t record a transaction twice or record it to the wrong account. Then, follow up with any charges that aren’t clearing.
Next time you’re reconciling your accounts, don’t give yourself a pat on the back for a zero dollar difference until you’ve checked all of your unreconciled transactions!