As we previously mentioned, bank reconciliation can empower you to detect fraud from an array of sources. For example, if you pay a vendor by check, and they fraudulently change the amount, you would know in a timely manner through reconciliation. At the same time, if you share a joint account with a partner, you can detect if they’re withdrawing more than what’s recorded in the books. Although this process will not prevent fraud, it can empower you to know, initiate a timely response, and limit exposure.
In addition to providing timely fraud detection, account reconciliation can also serve as a deterrent. If your employees are aware that your business’ bank statements are reconciled, they will be less likely to attempt fraud against the business.
Your cash flows are everything to your business. Reconciling bank statements enables you to know and understand the relationship between money entering your business and bank account. It will also offer insight into the manner you collect and spend money.