Business readiness

Bank Statements

What is a Bank Statement?

Bank statements are a record of all transactions made by your company, in a specific period of time, with various financial institutions.

Bank statements itemize all financial transactions made by your company and state the cumulative balance in each bank account in a specific reporting period.

They cover:

  • Account Summaries: Opening and closing account balance, deposits and withdrawals, interest earned, transfers, withdrawals, service charges
  • Transaction Details: All transactions incurred; dates, details, amounts, reference numbers and the remaining balance

Your bank issues these statements to your company every month in an electronic or printed format.

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Why are Bank Statements important for business today?

Bank statements enable your company to:

  • Access up-to-date records of your company’s cash flows and bank balance
  • Reconcile bank statements with your records to determine any calculation errors or fraud
  • Evaluate the cost associated with maintaining a bank account, transferring money and penalties
  • Determine the amount of interest earned to compute your tax liabilities

Why is it important for an event tomorrow?

Bank statements are important for an event tomorrow, as they help:

  • Determine and validate liquid cash held by your company in each account across jurisdictions
  • Measure the financial health and stability of your company
  • Evaluate volatility of your company’s account balance and assess the reasons for any variation
  • Assess the nature of your company’s inflows and outflows by analyzing transfers and payments
  • Forecast future cash flow of your company by evaluating historical trends

Pros of addressing Bank Statement

  • Help detect fraud or errors and illicit or unauthorized payments
  • Use as evidence for tax and regulatory filings and in case of any payment related litigation
  • Establish transparency between the bank and your company
  • Assist in preparing financial statements or reports of your company
  • Improve operational planning by assessing the balance in your accounts across jurisdictions

Cons of not addressing this topic

  • Restricted ability to track the total cash held by your company
  • Increase in risk of errors, fraud and unauthorized payments due to your company’s inability to monitor transactions
  • Difficult to identify duplicate or incorrect charges and interest earned by your company
  • Increase in regulatory risks due to non-submission of reconciled bank statements to regulatory authorities where required.

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