Quickbooks Reconciliations: Not Just for Banking

Most Quickbooks users are familiar with doing monthly bank reconciliations and the importance of doing so. Some reconcile credit cards on a regular basis as well (good job!). That’s where most reconciliations end, but don’t have to.  The bank reconciliation feature in Quickbooks (both Desktop and On-line) can be used to reconcile any balance sheet account, such as :

  1. Car and equipment loans
  2. Employee advances
  3. Customer deposits
  4. Retention
  5. Accrued expenses
  6. Prepaid expenses
  7. Fixed assets
  8. Prepaid revenue

Beginners/Moderate Users: I’d start using this for things like car or equipment loans (that you get a statement for or have an amortization schedule for. This way you can enter the interest at the same time.   After you master that, then I’d go to more complex accounts.

Advanced users: This can be used for the more complex reconciliations, for instance a prepaid expense account.  There are lots of entries and some of them have been amortized out, some haven’t and some are just errors. Finding what makes up that balance can take a day of spreadsheet work , but doesn’t have to if you regularly use this feature.

The most difficult part of the process will probably be finding a starting balance and clearing out any old transactions in there. After that, this can become part of your monthly close process and save all that scrambling at tax time.

To get started:

  1. Find a good starting balance. Let’s say you have one for 12/31/15.
  2. Go to the reconciliation screen and select the proper account .
  3. Enter the starting balance and the date (as our example) 12/31/15 as the account “ending” balance.
  4. Click “hide transactions after statement end date”.
  5. Clear all of the transactions to that date, the variance should be zero.
  6. Reconcile the account periodically just like a bank or credit card statement.

Using this feature on a regular basis can help save all of that spreadsheet work, hours of searching for errors and cumbersome tracking.