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Cash, more than a reconciliation

Updated: Nov 20, 2023

Reconciling your book balances to the bank's is great. However, your cash may still be over or understated depending on what you have listed as outstanding or "uncleared" deposits and disbursements.

Pull up your latest bank reconciliations and scan the listing for uncleared deposits and disbursements that may be several months or years old. Chances are you'll have some smaller checks, uncashed payroll or vendor checks, but be on the look out for larger dollar value items. If you pay most of your vendors with a credit card, check for double payments, one via credit card and one through check. You may have recorded an expense twice and have a check hanging out there understating your cash balance. Similar circumstances may apply when you're receiving payment from your customers through ACH and checks. However, instead of understating cash, you may be overstating cash by double booking receipts. Only one will clear.

Knowing your true cash account balance is crucial. But fortunately it doesn't take too much effort if it's monitored on a regular basis.

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