Bank Statements

What is a Bank Statement?

Bank statements are a financial 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.

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.