The Importance of Monthly Reconciliations (And What Happens If You Skip Them)

As a small business owner, it is easy to push bookkeeping tasks down the priority list, especially when things get busy. But there is one task you cannot afford to overlook: monthly bank reconciliations.

Whether you handle your books yourself or work with a professional, reconciling your accounts each month is critical to maintaining financial clarity and business health. Let’s dive into what monthly reconciliations are, why they matter, and the risks of skipping them.

What Is a Monthly Reconciliation?

A bank reconciliation is the process of comparing your business’s financial records (like those in QuickBooks or your spreadsheet) with your bank and credit card statements to ensure everything matches up.

The goal is to catch and correct any discrepancies like missing transactions, double charges, or bank errors before they snowball into bigger issues.

Why Monthly Reconciliations Matter

1. Ensure Accuracy in Your Books

Even with software automation, errors happen. Reconciling monthly ensures your records reflect reality. Inaccurate books can lead to bad decisions, missed deductions, or compliance problems.

2. Catch Fraud or Unauthorized Transactions

Reconciling helps detect suspicious charges, duplicate payments, or fraudulent activity. The earlier you catch them, the better your chance of recovering funds or resolving the issue.

3. Maintain Cash Flow Control

Understanding exactly what has cleared the bank and what has not helps you manage cash flow and avoid overdrafts or missed payments.

4. Stay Ready for Tax Season

Clean, reconciled books make tax filing smoother, faster, and more accurate. You (or your CPA) will not be scrambling to fix months of mistakes or track down missing info.

5. Support Loan Applications or Financial Reviews

Whether you are applying for financing or reporting to investors, having reconciled financials gives you credibility and shows you are serious about your business.

What Happens If You Skip Reconciliations?

Skipping monthly reconciliations might not cause issues right away but over time, the risks grow significantly:

• ❌ Undetected errors compound month over month

• ❌ Incorrect tax filings can lead to penalties or audits

• ❌ Inaccurate cash flow forecasting impacts budgeting and planning

• ❌ Fraud or theft may go unnoticed for months

• ❌ Overstated or understated profits can mislead your decisions

It is like driving with a foggy windshield you can keep going for a while, but eventually, you are going to miss something important.

How Eddington Financial Solutions Can Help

At Eddington Financial Solutions, we make monthly reconciliations seamless and stress-free. As part of our ongoing bookkeeping services, we:

✔️ Reconcile all bank and credit card accounts monthly
✔️ Flag and correct discrepancies
✔️ Keep your books accurate and audit-ready
✔️ Provide reports that give you real-time financial clarity

Whether you are months behind or just want a second set of eyes, we are here to help you stay on track.