5 Biggest Bookkeeping Mistakes Fixed: Part Three

Not Reconciling Completely by Leaving Old Outstanding Items

Most people reconcile their bank accounts and credit cards in QuickBooks, and for good reason: It’s fast, easy, and important. Monthly reconciliations make sure not only that you didn’t forget to record any checks, deposits, ACHs, or credit card transactions but also that you don’t have duplicate transactions. People often stop when they get to a zero balance in their reconciliation, but they don’t do critical final step: making sure there are no old uncleared items.

Checks should clear within 90 days of when they were written. If one hasn’t, you need to look into it further to make sure it’s not a duplicate. Details on how to do this are in our Growth Plan’s detailed Control Sheet, visit jordancpaservices.com/GrowthPlan to learn more.

Deposits should show up on the bank statement for the month they are dated in QuickBooks with the rare exception of a deposit that is recorded in QuickBooks on the last day of a month but doesn’t clear the bank until the following month.

Credit card charges should show up on the credit card statement within 3 days of when they are recorded in QuickBooks, so the only charges that might not show up on the same month’s statement are the ones at the end of the month.

Checking for old uncleared items is critical because if you don’t, your cash balance, income, and expenses can all be way off. For example, let’s say that you accidentally recorded a deposit for $4,000 twice. (This can happen a variety of ways from entering it once, forgetting you did, and entering it again, or by accepting the deposit from the bank feed and then manually adding it afterwards. If you don’t ever deal with this uncleared deposit, your sales and cash could both be overstated by $4,000. I’ve seen companies with more than $100,000 in accumulated misstatements because they did not ever clear out their old uncleared transactions.