“Why do you need my bank statements?” It’s a common question, especially as many people don’t receive paper statements and check their bank balance online or on a smartphone.
What’s a bank statement?
A bank statement is a summary of the financial transactions that have occurred over a given period (usually a month, sometimes 3 or 6 months). It shows the opening balance in the account, deposits and payments, and the closing balance.
In the past, statements were sent to customers in the mail. These days, most banks make statements available for viewing and download from their internet banking.
Why do we need them?
In the days of online banking, why do we ask for these old fashioned documents? Aren’t bank transactions sent automatically to Quickbooks or Xero? Yes they usually are, but we still need the bank statements. Here’s an example of why …
Louise checked her Profit and Loss Statement for the month. It looked as though some expenses were missing. She knew she had paid her royalty but it wasn’t in the figures.
On investigation, we found that transactions for a period of 10 days were missing from her Quickbooks records. We discovered this by comparing the bank deposits and payments shown in Quickbooks with the bank statement. This enabled us to identify the missing transactions and correct the accounting records.
Mistakes can also arise through human error. For instance, expenses are sometimes recorded twice or transactions deleted in error. Sometimes, transfers between bank accounts are incorrectly coded, or a payment allocated to the wrong bank account.
And the more transactions that take place, the more likely it is that errors will occur!
Apart from this, when we prepare your annual financial statements and tax return we must check that the figures in the accounts tie in to your bank statements.
So, even with automated bank feeds, we still need your bank statements. They help us spot errors and keep your financial statements accurate.
What to send us
When you work with us, each month you’ll receive a reminder to send your bank statements. You can email them to us, or upload them to your secure client folder.
For each business bank account and credit card we need the statement in PDF format.
A bank statement shows every transaction on the account, together with the running balance and opening and closing balance. It’s not a csv/transaction file or a screen shot.
You will be able to download the statements from your online banking. Some savings accounts default to quarterly statements but it’s best to change to monthly statements, if possible.
By the way, we expect that technology will soon allow us to receive statements automatically, but it’s not quite there yet - so we still need your help.