Intuit - The New QuickBooks Online
Newly Revised Bank Feeds
Recently I had a conversation that made my skin crawl. In speaking about getting data into QuickBooks the prospect said, "we just download everything, it makes it really easy." OK, but how do you verify the charges? The prospect was silent.
All too often users download information from the bank or credit card company, categorize it and go on their merry way. If you don’t mind throwing away money then this isn’t a problem but if like most you don’t have money to waste, then you need a process to validate everything you download.
BANKS MAKE MISTAKES! Not so long ago I wrote a check for $50 and sent it to the vendor. When my bank statement came through I saw the check had cleared for $550. I took the cancelled check to the bank and they quickly credited my account; however, if I just downloaded and didn’t verify or if I waited months to reconcile I might not have found the problem in a timely manner. Banks have different policies but if you don’t report problems in a specific period of time they don’t have to correct a problem. I can tell you other horror stories including banks clearing checks that had VOID written on the face and no signature or accidentally sent to the wrong vendor and then deposited. Perhaps you have some stories of your own?
Credit card and debit card issues can be just as bad. I have seen times where a charge has come through twice, perhaps on two different statements, or where a credit has not come through from a merchant. Without good controls you may miss these and spend money you should not have spent.
With the regular issues with sites being hacked it is especially important to check credit card and bank statements quickly to make sure that someone has not stolen your account information. If you don’t report fraudulent charges in a timely manner you can be liable for charges that otherwise would have been refunded.
So what should you do? Always make sure to review your bank statements and do a reconciliation in a timely manner. Make sure that you get receipts and match them against the information on the statement or the transactions you download. In some cases you may need the receipts for IRS deduction purposes as well, so check with your accountant.
While I am not addressing internal fraud here I will mention an important precaution against internal fraud - separation of duties. Ideally you have one person entering the bills and someone else verifying and paying or signing the checks. No matter what, the owner should always be the one to receive and open the bank statement. Look for checks to unknown vendors. You should also think about processes to make sure that all checks received as deposited in the bank. Perhaps this is a good reason to accept credit cards or ACH payments.