What is a reconciliation? Why is it important in getting paid?
What is a reconciliation and how do you complete one? Is it really hard to do? Why should I be reconciling my bank to my outstanding invoices?
The most important thing about getting paid is knowing what is still outstanding. This is called reconciling.
Reconciling is easy providing you have the records in place. It doesn’t matter whether you use an accounting software, Microsoft Excel or a printed copy.
You need a record of every invoice you raise. Then, once a day, once a week, once a month, whenever you fancy doing it; even twice a day for some people, log on to your bank account, have a look at what money has come in.
Then, on whatever accounting system you use, tick as PAID and make a note of the date you received the money.
Karen, a Virtual Business Assistant and member of my VIP group said
“After discussing Reconciling in the group in October, I went away and reconciled my invoices. I thought everyone had been paid, however, I discovered one from May this year that hadn’t been paid. The Courage I’ve got from the VIP Group meant I was
not scared to pick up the phone and ask about the payment. I received the payment within 5 days of that call. If it hadn’t been for VIP Group, I don’t know when I’d have realised I was still owed this money.“
If you’re using an accounting software you should then be able to print out a list of unpaid invoices. You will then know the invoices you need to focus on and get paid.
If you use excel, you can put a filter on for any entries with a blank paid date, or sort the columns by blank cells.
If you’re using printed copies of your invoices, I would recommend you file them in two sections: One for paid and one for unpaid. When you receive a payment, you move that invoice from the unpaid section into the paid section. That way you don’t need to be shuffling through loads of invoices to find the ones you should be focusing on. They’re all there and it’s all clear.
If you don’t understand the term reconciling. It can sound scary but really it isn’t. Reconciling is just a way to record what has been paid and what is outstanding.