Monthly bank statements detail each transaction and serve as a key tool in managing your accounts. The statements create a direct link between the bank's records and your accounting system. Reconciling your accounts with the bank's can identify errors, among other things.
Balancing Your Account
A reconciliation statement provides a tool to balance your bank account. With the statement, you verify what checks, bill payments and debit card charges came out of your bank account. You are also able to identify checks or payments that didn't come out of your account as planned. Additionally, you get a better sense of your actual balance when taking into consideration the charges that are still outstanding. If you earn interest or other benefits, such as fewer fees, for maintaining a certain amount in your bank account, balancing your checkbook helps you ensure you stay at that level.
Checking for Errors
With the sheer number of transactions a financial institution processes in a day, occasionally a mistake may happen. Reconciling your bank account each month allows you to notice if your financial institution makes a mistake when entering and processing each transaction. The statement also helps you find errors in your own financial records. Even with regular logging of your transactions, you may miss one or enter a number incorrectly in your records. The reconciliation statement helps you compare your records of the debits, cash withdrawals and checks drawn on your account with the information the bank has on record to resolve any errors.
Tracking Account Fees
The statement shows all of the fees charged by your financial institution. These fees often aren't tracked by the consumer since they are added by the bank based on the use of the account. Reconciliation helps you verify that the fees and charges from your bank or credit union are valid and in accordance with your account terms. If you review your statements regularly, you are more likely to notice if your bank starts charging you a new fee. You are also able to input those fees into your personal accounting program or financial records for accurate account balances.
Identifying Potential Fraud
Reconciling your bank account enables you to identify fraudulent use of your money. If you don't monitor your account closely, fraudulent charges may go unnoticed, particularly with a high account balance. Financial institutions often catch the misuse eventually, but reconciliation statements help you notice the problem right away. Identifying unauthorized use of your account early prevents additional charges and allows the bank to restore your account.