What task is so critical to the whole accounting process you ask? In my opinion, it is completing your monthly bank reconciliation. This task involves going through your monthly transactions to see whether they have cleared the bank. You may end up with a list of outstanding deposits and withdrawals that have not cleared the bank. You then take your closing bank statement balance and add your outstanding deposits and subtract your outstanding withdrawals to determine your actual bank balance at the end of the month.
Why is this task so important? If your bank account is not reconciled you may be missing transactions, which means your accounting records are not complete at month end. Having complete records is important in order to make better business decisions. It is important that you know whether you have enough cash flows to cover various expenses. As well, you need to know whether you will owe taxes such as HST or income tax. Having a complete income statement will help determine these amounts.
Xero helps me with performing bank reconciliations for my clients. Bank statement lines are uploaded daily into their application via a read-only feed. I then code the lines accordingly to their proper account. There are tools such as Receipt Bank and Hubdoc that can speed up the process by publishing invoices directly into Xero along with the extracted data in the form of a bill from the supplier.
If you are looking for an accountant that specializes in cloud-based bookkeeping feel free to contact me. I would be happy to have an initial consultation.
