If you want to maintain balanced financial records and promptly address discrepancies, bank reconciliations (bank recs) are essential. But completing bank recs monthly can be a struggle for overwhelmed accounting departments. Yardi Voyager’s Bank Reconciliation feature is a powerful tool that can help. It efficiently matches most transactions and flags any reconciliation issues for unmatched transactions, making it invaluable for maintaining financial integrity.
In order to maximize the effectiveness of Yardi Voyager, it’s crucial to adhere to bank reconciliation best practices, such as those outlined below.
1. Complete Monthly Bank Reconciliations
When you run bank recs regularly, it allows you to swiftly identify and address fraudulent activities, such as duplicate cheque cashing. Banks often have a limited window for refunding fraudulent transactions, usually around three months. Missing this window could necessitate costly legal action. Monthly reconciliations also help maintain an accurate cash flow, which is crucial for the smooth operation of your business. By catching issues like overspending or inaccurate reporting early, monthly bank recs can save your company considerable time and money. Don’t forget to close the last month before you set up a new bank rec to make sure everything is balanced.
2. Ensure Compliance with Financial Covenants
For businesses with bank loans or third-party debt, meeting specific financial covenants each reporting cycle is often mandatory. These may include maintaining a particular debt-to-equity ratio or ensuring a certain level of cash flow. Accurate financial data is critical for these calculations. This is because inaccuracies can lead to lenders calling in debt prematurely, posing significant challenges for small to medium-sized businesses.
3. Set Up Your Bank Accounts for New Properties Immediately
If you don’t set up a new bank account for your property immediately, it can result in expenses being paid from the wrong account. You need to ensure that each new bank account is linked to the correct property and general ledger (GL) account before making deposits or withdrawals. This allows Yardi to include these transactions in the GL and the bank reconciliation, ensuring that all transactions are accounted for correctly.
4. Set up Electronic Fund Transfers (EFTs)
Ensure that all necessary documentation and information are correctly set up to facilitate smooth EFTs. By setting them up properly from the outset, you can prevent errors, such as sending incorrect EFT amounts or processing unintended EFTs. This is especially critical due to the fact it can take up to 10 business days to correct errors. That kind of delay can lead to more problems. In short, correctly setting up EFTs from the start can keep relatively small problems from becoming an avalanche.
5. Seek Expert Assistance
While implementing best practices yields long-term benefits, an overwhelmed accounting team may struggle to find the time and resources to do so. However, neglecting best practices – or bank recs themselves – can lead to significant time and financial losses. If this is your team, you may need to look into outsourced accounting teams with Yardi expertise, like Lynx, to fill in the gaps.
Of the above points, the most important thing to remember is setting up new bank accounts. Running a bank rec isn’t going to catch missing accounts, so if this mistake is made it’s difficult to catch, unlike other errors.
The second most important thing to remember is to get help. Especially if your team is struggling with monthly bank recs. One of the advantages of outsourced teams like Lynx is our ability to connect you with top Yardi accountants, with the flexibility to have them work with your team only when needed.
To find out more about how our team can take the stress out of bank reconciliations, please get in touch.
