As a business owner, you have a lot to juggle. And it’s likely you are constantly keeping an eye on your bank account to see how much money you have available. But how do you know if you’ve received all the funds from each day’s sales? Did the merchant processor transfer the payments that were due for that day? Were cash deposits made by your manager on time?
Record Your Revenue Every Day
The easiest way to determine if you received what was expected is to enter each day’s revenue into your bookkeeping software. You should group the transactions into categories (cash received, credit card payments, and gift card sales/redemptions), so your records are organized and easy to make sense of. Then each week (or even better, each day), you should compare your expected receipts for each category to what was actually deposited in your bank account. If the amount you expected is not received within a reasonable period, you should research the difference.
Recently a business owner came to me wanting to help them get their books ready for their CPA to do their Taxes. They had not reconciled their revenue for the entire year. After reconciling their bank, Point of Sale system and Merchant Processing statements I identified a situation where thousands of dollars were missing because their merchant processor had made an error and was not transferring the funds for certain transactions.
Watch Your Cash Transactions
In another situation I identified that a business’s general manager was not making cash deposits until days after the cash transactions were recorded. It turns out, he was loaning himself the money, then repaying it with future deposits. I found these inconsistencies because I was recording the expected receipts and comparing them to the amounts received by the bank on a timely basis.
Reconciling revenue is a process that is necessary to make sure you are receiving all the funds especially if you have cash transactions, due to your business.