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Why is reconciling your books so important?

Whenever I do a QuickBooks training, I always stress the importance of Reconciling your books every month.  Generally, the reason I give is that you are going to make some data entry mistakes as you go along each month and the only way to catch them is to do a reconciliation.  Although this is very true and just enough reason alone, something happened to me yesterday that gives another extremely valid reason.  Here’s my story…

The other night, my husband and I went out to dinner with some friends.  When it came time to pay the bill, generally I always put the whole charge on my Debit Card and our friends pay me their portion in cash.  So we did this that night like we always do. Now here’s something to keep in mind.  Whenever I pay via plastic, I always make sure to fill out both the merchant and customer receipt in a very specific way.  If I’m leaving a tip on the card, I write the tip amount in and calculate the total on BOTH receipts.  If I’m leaving a cash tip, I ALWAYS draw a line through the tip section and copy down the total on BOTH receipts.  I do this to reduce the chances that a server will write in their own tip. 

So, for those of you who don’t know, I use QuickBooks for my personal books.  (I have my mom to thank for this as many moons ago when she was grooming me to become a QB advisor, she told me the best way to learn was to setup my own set of books on the system).  So as usual, I entered the debit card charge into my QuickBooks during my weekly updating.  Anyway, last night I was doing a reconciliation of my checking account to my QuickBooks and I came across something that inspired my post today.  When I came to the restaurant transaction, my QuickBooks said the charge was for $53.00 and yet my bank statement cleared it for $69.00.  That’s a $16.00 difference.  Because of this discrepancy, I pulled out my copy of the receipt to see if maybe I had entered it into QB wrong.  Sure enough, my receipt said $53.00 and had a line through the tip section. 

Hmmm, maybe I had pregnancy brain that night and actually did leave a tip on the card.  I pulled out my calculator and figured out that even if I had left a tip on the card, I would have left only about $8 or $9 because I typically double the tax.  The $16.00 was DOUBLE what I would have left.  Nope, definitely not my mistake.  I called the restaurant and had them research it on their end.  Sure enough, the waiter had run my card for more than what I had agreed to on paper.  Now, they wouldn’t tell me if he had the guts to actually cross out my numbers and put in his own or if he had just ignored what I wrote and charged his own amount anyway.  Either way, shady shady stuff.  The manager was very apologetic and agreed to refund my money as I expected they would.  Phew, problem solved.

Moral of the story?  Not only is it important to enter in your daily banking and credit card transactions into QuickBooks, but it’s even more important to do a reconciliation every single month so you can be sure that no one is taking your hard earned money when they are not supposed to be.  As an aside, if you are using QuickBooks Online Banking, be sure to keep and then compare your physical receipts to your QB transactions in order to catch any mistakes.  A normal reconciliation when using QB online banking won’t catch any issues, because if you are downloading the banks transactions into QB, of course your reconciliation will match.  QB is your statement in that case!

As always, if you want to implement anything you have read in this post and need some guidance, you know where to find us!  Have a great weekend everyone!

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