6/17/2023 0 Comments Tutorial duplicate detective![]() ![]() ![]() This isn’t an issue if everyone has their own company card. If actual payments are incorrect, you also don’t know who to turn to. If receipts are missing, it’s hard to know who to chase and In most growing companies, they’re passed around on a fairly casual basis. The most basic issue with company credit cards is the way they’re typically deployed. Here are some of the key causes of headaches. Or better yet, accounting automation software would do it for them. The accountant or controller would simply scan through both, see that everything lines up, and close the books. In a perfect world, general ledger accounts and credit card statements would match 100% of the time. Without that proof, you may fail an audit and either miss out on new investment, or face legal trouble. The tax office or a third party auditor needs to see proof that every payment truly took place. This is even more important during an audit. Accountants use bank statements, receipts, and credit card statements to verify that each transaction is what it claims to be. Payment reconciliation uses further documentary evidence to prove that the general ledger is accurate. Or, in less devious cases, the ledger could simply contain mistakes. Accountants use the general ledger alongside balance sheets and income statements to show how financially healthy the company is.īut, in theory, an accountant could list any payment for any amount in the ledger, just to make the books appear in good shape. Why is reconciliation important?Ī company’s general ledger lists every transaction that occurred during a given period. The principles are actually fairly similar, but we want to focus on the challenges around company credit cards. In this post, we’re talking only about the expenses side of the equation: transactions made by your team to purchase goods or services. If your business accepts credit card payments from customers, you need to match amounts received in your bank account against statements from your payments processor (Paypal or Stripe, for example). Income vs expensesĬredit card reconciliation actually impacts two aspects of the business: income and expenses. The financial close process typically occurs monthly, with larger closing exercises happening at the end of each quarter, and the end of the financial year. If parts of the ledger don’t match what’s on the credit card statement, the financial controller then needs to find out who made the supposed payments, and what has caused this discrepancy. ![]() If every payment in the ledger matches one in the statement, the ledger is accurate and the books can be closed. Most simply, accountants compare company credit card statements against the general ledger. For effective and accurate bookkeeping, businesses need to know that every transaction did in fact take place, and is what it says it is. Credit card reconciliation is the system accountants use to make sure that transactions in a credit card statement match those on the company’s general ledger. ![]()
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