If it seems like you can never get the numbers to add up correctly in your accounting, it could be due to tiny mistakes that keep throwing your numbers off. Sometimes the mistakes are obvious. Other times, it seems like you may never find the mistake. The smaller the mistake, the more difficult it can be to find.
As property managers that work with several organizations throughout the Twin Cities, we find that many of these mistakes are common but avoidable. This is especially true if you use the right software and have a system of checks and balances in place so that others can check and verify your work.
Below are some of the most common bank reconciliation mistakes you should avoid because they can have a huge negative impact on your accounting.
Inversion or Transposition Errors
The error is quite simple but can drastically change your ending balance. A transposition error occurs when the numbers are flipped in the entry. Examples:
● $1,900 instead of $1,009.
● $14.72 instead of $14.27
● $863 instead of $368
Although all inversions can throw off your accounting, some of them can throw off your balance significantly. You can correct these errors by comparing your ledger to the actual bank ledger or by getting someone else to read off the real numbers until you find your mistake.
Incorrect Account Entries
Accounts can include HOA members, revenue streams, expenditures, or other entities. You can tell if your account entry is incorrect when the account is off but the bank reconciliation is accurate. The inaccuracy could be the account number, name, check, amount, or transaction designation. Examples:
● Account Number 1223344 instead of Account Number 1223345
● Member John Rhodes instead of member Joanna Rhodes
● Annual dues instead of a one-time fee
Wrong Check Entry
There are several ways to enter check information incorrectly: check number, date, account number, company or individual, outstanding checks, or amounts. Examples:
● Check #120 for $600 instead of Check #121 for $600
● Check #1376 has been outstanding for three months and is expired but not voided.
● Check #110 is from Ace Landscaping instead of Ace Electricians
When adding checks to the bank ledger, start with the check number and amount, then fill in the rest of the information. Double-check every check entry. Make sure you void out any expired checks or replaced checks.
Your Property Manager Can Handle Your Bank Reconciliations
At RowCal, our property managers can handle all of your HOA’s accounting including bank reconciliations. We utilize a cloud-based online software program that allows our accountants to collaborate with your HOA treasurer to keep accurate records of your bank transactions. We can help ensure that you always know exactly how much you have in your bank account at all times.
Property Management Services in Minneapolis, MN
Whether you are an HOA or a property owner, RowCal can help you with your property management responsibilities. We offer a wide range of services including management, financial administration, online resources and tools, and project management.
To find out more about the products and services we provide in Minneapolis, MN, call us at 651-233-1307. You can also send a message on our contact page.