So why do you need to reconcile your accounts? For one thing, it helps you catch financial mistakes before they become bigger problems. For example, if you entered a check amount into your general ledger but forgot to physically cash that check, you’ll discover the error during the bank account reconciliation process.
Or maybe you scheduled a rent payment and listed it in your chart of accounts as usual, but the notification that your payment bounced went to your spam folder. As a result, you didn’t notice the payment actually bounced until your end-of-the-month bank reconciliation.
Bank reconciliation also helps you identify fraud or theft and intervene early. If someone has withdrawn funds without your knowledge or consent, bank reconciliation will clue you in.
Finally, bank reconciliation helps you maintain accountability. If you’re working for yourself, you (or your accountant or bookkeeper) will perform bank reconciliation. But if multiple people handle your business’s finances, the person reconciling the accounts should probably be different from the person signing the checks.