In a one-person company, it’s relatively easy to know that your accounts are well taken care of. Accountants and financial controllers compare receipts, invoices, and other primary documents against expense claims and transaction histories. What is expense reconciliation?Įxpense reconciliation uses this same process of record checks to ensure that a company’s expenses in practice match what was recorded in its general ledger.
We’ll look at some key ways to improve both monthly and yearly closing shortly.
Finance teams also face the famous end-of-year financial closing process annually, which can be strenuous and long to complete. Payment reconciliation typically occurs at the end of the month.
The most obvious example is balancing cash outflow statements against income statements: does your closing bank balance equal income minus spending? The goal is to make sure that your records are accurate, that income and spending in your accounts are the same as in your books, and to spot any mistakes, fraud, or wrongdoing. Financial reconciliation involves checking and verifying that two sets of records match.
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