Why Bookkeepers Ask For Bank Statements (And What They Do With Them)
Have you ever wondered why bookkeepers ask for bank statements? Or what they do with them when they get them? In this blog post, we'll take a look at the importance of bank statements and the role they play in bookkeeping. We'll also discuss ways to make it easier for bookkeepers to use your bank statements to complete their tasks. Read on to find out more!
Introduction to Bookkeeping
Any business owner or manager will eventually need to come to terms with the financial side of running a company. This includes understanding bookkeeping, which is the process of recording and tracking all financial transactions made by a business. Many small business owners handle their own bookkeeping, but as businesses grow, they often hire professional bookkeepers or accountants to do this work.
Bookkeepers use various tools to track a business's financial transactions, including bank statements. Bank statements provide a record of all deposits and withdrawals made to and from a company's bank account. Bookkeepers use this information to keep track of how much money the company has on hand and to reconcile the account with the company's books.
Bank statements can also be used to track expenses. By categorizing transactions and comparing them to budgeted amounts, bookkeepers can help identify areas where a company is spending too much money. This information can be used to make adjustments to the budget and help save money in the long run.
Overall, bank statements are an important tool for bookkeepers and play a vital role in helping businesses stay financially healthy.
What are Bank Statements?
Bank statements are financial statements that show a bank's transactions over a set period of time, usually one month. They include all deposits, withdrawals, fees, and interest earned or charged during that period.
Bookkeepers use bank statements to reconcile the accounts in their clients' books with the actual transactions that have taken place. This is important because it ensures that the books are accurate and up-to-date.
There are two types of bank statements: summary and detailed. Summary statements show only the total amount of money deposited, withdrawn, and spent during the period. Detailed statements show all individual transactions.
Most bookkeepers prefer detailed bank statements because they make it easier to identify and correct errors. However, summary statements can be useful if you want to get an overview of your spending or income for the month.
Why Do Bookkeepers Ask For Bank Statements?
As a business owner, you are responsible for ensuring that your bookkeeper has the information they need to do their job properly. This includes providing them with copies of your bank statements on a regular basis.
Your bookkeeper uses your bank statements to track your income and expenses, reconcile your accounts, and prepare your financial reports. Without accurate and up-to-date bank statements, your bookkeeper would not be able to do their job properly.
There are a few reasons why your bookkeeper might ask for additional or updated bank statements throughout the year:
1. You've made changes to your banking arrangementsIf you've switched banks, opened new accounts, or made any other changes to your banking arrangements, your bookkeeper will need updated statements reflecting these changes.
2. Your account activity has increased or decreased significantlyIf there has been a significant increase or decrease in your account activity, this could indicate a problem that needs to be addressed. For example, if you suddenly have more money going out than coming in, this could be a sign of embezzlement or fraud. On the other hand, if there is a significant decrease in activity, this could indicate that you're not doing enough business to sustain yourself financially. Either way, it's important to alert your bookkeeper so that they can investigate further.
3. There are discrepancies between your records and the bank's records
What Do Bookkeepers Do With Bank Statements?
Bookkeepers use bank statements to reconcile your business's accounts. This process ensures that your books are accurate and up-to-date.
During reconciliation, the bookkeeper will compare the transactions shown on your bank statement with the ones recorded in your company's books. If there are any discrepancies, they will be noted and addressed. This process can help catch errors and prevent fraud.
Once reconciliation is complete, the bookkeeper will prepare a report that shows your business's financial activity for the period covered by the bank statement. This report can be used to help make decisions about where to allocate resources and how to manage cash flow.
Benefits of Working with a Professional Bookkeeper
There are many benefits of working with a professional bookkeeper, including gaining peace of mind and reducing stress. A professional bookkeeper can help you keep track of your finances, budget better, and make more informed decisions about your spending. They can also help you save time by taking care of all the paperwork and admin associated with running a business.
Tips for Working With a Professional Bookkeeper
If you're working with a professional bookkeeper, there are a few things to keep in mind.
1. Be prepared to provide bank statements. This is the most important information a bookkeeper needs to do their job correctly.
2. Be patient while the bookkeeper works. They need time to reconcile your accounts and make sure everything is accurate.
3. Don't be afraid to ask questions. A good bookkeeper will be happy to explain anything you're not sure about.
Conclusion
Bookkeepers need bank statements in order to accurately and efficiently manage the finances of any business. By having access to these documents, bookkeepers can help a company stay organised, compliant with regulations, and profitable. Bank statements are an invaluable asset for any business’s financial health and it is important for businesses large or small to be able to provide them when asked by their bookkeeper. Knowing why bookkeepers ask for bank statements will help you better understand the importance of providing them when requested.
How we can help you
If you are the owner of a limited company we can help you with all of your bookkeeping, VAT and payroll needs.
With over 25 years of accountancy experience we can help save you time and money by keeping all of your books up to date, accurate and provide you with helpful financial information each month saving you the headache of working everything out yourself.
By taking care of your Bookkeeping, VAT and payroll we will make sure that you are compliant with HMRC and Companies House. We will also deal with your tax accountants at year-end to save you time.
You can find out more about our services here and for a free initial no obligation consultation please contact us to get the ball rolling.
About the author
Hi, I am Naomi the Founder & Director of Rainys Financials Limited. I have been working in accountancy for over 20 years. As a Finance Manager i have trained and managed teams of accountants and been responsible for running a large accounts department. This experience has given me inside knowledge into what it takes to be responsible for the day to day finances of well established businesses with eight figure turnovers.
My experience of working as a Financial Controller for a variety of smaller businesses has given me the knowledge of what it takes to manage the finances of small businesses whilst they are growing and developing.
It has been my goal to build a business of my own so that i can offer my knowledge and experience to support business owners with a variety of services in order free up their time and ease any stress by looking after their day to day finances.
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Please refer Rainys Financials to a business owner you know and ask them to contact enquiries@rainysfinancials.co.uk for a no obligation consultation and mention your name. If they sign up and pay their first months fees you will receive a £50 Amazon voucher with our thanks.
Please refer Rainys Financials to a business owner you know and ask them to contact enquiries@rainysfinancials.co.uk for a no obligation consultation and mention your name. If they sign up and pay their first months fees you will receive a £50 Amazon voucher with our thanks.Please refer Rainys Financials to a business owner you know and ask them to contact enquiries@rainysfinancials.co.uk for a no obligation consultation and mention your name. If they sign up and pay their first months fees you will receive a £50 Amazon voucher with our thanks.
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