Cash Reconciliations

With almost all information on the internet for all banks, it is pretty easy to do daily balance roll forwards. This should make the month end reconciliation a formality. On your second issue, I like the consolidation unless you are trying to separate legal entity cash payments. We have gotten around this with a tracking within intercompany accounts.

Patrick is right. With online access, you can do daily recons and more or less finish it by 12:05 am of the 1st which is just usually encoding last day transactions and bank charges.

Regarding the separate accounts (multiple accounts, 1 bank / multiple accounts, multiple banks), consolidation is recommended. One factor to consider is if your company has considerable cash that can be invested I would recommend more than 1 banking relationship (2 is good, 3 at the most) with the least number of accounts needed. This gives you the leverage of finding a good rate for your investments and as well as an internal control and risk measure. Think of it as "leverage", "choice", or not placing everything in one basket.

Excellent replies, guys! I have only been with my current employer for a few months, and recommending changes in how things are done has to be gradual. But I will certainly share these comments with the CFO and he'll be on board. Again, changing processes (with other staff) will be the issue. Utilizing online bank access for more than just inquiries is the way to go. Quite frankly, I hadn't thought of that here!! Experience has taught me the fewer transactions you have to record at EOM, the better! Thank you. :)

"Utilizing online bank access for more than just inquiries is the way to go. " << to an extent, yes. Internal control still has to be enforced. Accounting staff can still reconcile with just an inquiry capability.

You have the answers to the roll forward question and automated solutions are widely available. As to the number of accounts, you can always go with a serial sort DDA for regional or managerial checks that you want separate info. That way on the disbursement side you have the ease of one reconciliation and the reporting detail that you may want. On the collection side, you can zero balance into a concentration account. Tax, control and accounting needs can be addressed with these cash management tools.

I work for a nonprofit and we have 20+ checking accounts. Some of them are reconciled on a daily basis, some once a week and some only at month end. We looked at the level of activity and determined the frequency. On a high activity account, daily reconciliation is definitely the way to go.

I'm not really sure how you can properly understand cash flow if you wait until the bank statement arrives to see your cash position; but of course this would depend on the company.

We have multiple bank accounts for different reasons. FDIC only insures accounts up to $250k per institution. We also have locations in areas where our main bank doesn't have a branch. The way we limit exposure is only one account is allowed to have online bill pay and checks. That makes EOM reconciling easy for the other accounts.

The more frequent the bank rec the more frequent the detection of possible fraudulent cheques (if you are still using cheques versus electronic transfers/bank payments). We had issues with mailed cheques being stolen, acid washed, then re-used for fraudulent means. We ultimately did away with cheques and utilized the bank's payment processing options.

Cash is king, and there is a Proformative webinar on December 18th, Raising Your Cash Management IQ to Optimize Working Capital, (https://www.proformative.com/events/raising-your-cash-management-iq-optimize-working-capital) that will focus on how effective cash management can impact the bottom line, and that includes 20/20 visibility of cash balances and reconciling cash.