The Purpose of Bank Statements in the Philippines
A bank statement is a document that shows the recorded cash transactions of a company in the bank. Companies use bank statements as an internal control tool to track the cash flows of the company.
This article delves deeper into the reasons why businesses should utilize bank statements in the Philippines. We also outlined here how and where you can access your bank statements.
Monitoring Company Records with Bank Statements in the Philippines
A bank statement is a record kept by your servicing bank that contains all your cash deposits, withdrawals, bank receipts, disbursements, and balance. Usually, companies request for bank statements to use in bank reconciliations.
Bank reconciliation is the process of comparing and reconciling the difference between bank and company records. It is also a way to review your transactions for the past period. This allows you to spot errors and unauthorized activities.
Generally, bank statements contain the following information:
- Your account number
- Principal address
- Period for which the bank statement covers
- How to inquire or report errors in the statement
- How to report fraud
- Beginning balance
- Deposits (cash, checks, bank transfers, canceled checks or receipts, reimbursements)
- Withdrawals (Cash payments, purchases, transfers, ATM withdrawals, bank charges, automatic payments)
- Ending Balance
Banks often provide statements monthly or quarterly. This depends on your servicing banks. You can get your bank statements online, through the mail, or software applications. You can use bank statements in the Philippines for many different purposes.
Manage Cash Flows
Bank statements present all cash inflows and outflows that occurred for the period. You can use this to track how often company customers pay their dues, and how timely the company pays for its purchases and other activities. You can then use this information to plan your cash management to optimize cash flows.
Verify Company Records
You can use bank statements to verify the accuracy of your company records by comparing the two. Input or human error may cause amounts to be inaccurate. These can be monitored by using bank statements.
Further, there could be activities appearing in your records that do not appear in the bank statement. You have to reconcile these differences to know if they are normal differences. If not, this could be an indication of error or fraud.
Spot Errors and Fraud
Mistakes happen all the time, and so it is important to review your documents for any errors. Both the bank and the company may cause errors in bank reconciliations. Bank statements in the Philippines can help you look for bank credit or debit errors, and company mistakes. Spotting these errors is better than having misrepresentations in your records and reports.
Additionally, bank statements can be used to investigate for fraud. If you notice red flags in your reconciliation or examination of bank statements, you have to take appropriate actions.
Monitor Interest and Charges
Interest and charges are usually in very small amounts. However, when you lump all these together, they could make huge dents on your pockets. Therefore, you must monitor interests and charges made in your bank accounts. If you have high penalties for overdrawing, you can put up strict controls to avoid drawing on insufficient funds.
Apply for Any Loan
Making loans often require bank statements on the application stage. Whether it be a personal loan or for business, financial institutions require bank statements to prove your financial standing. These are also needed to inquire about your credit performance. Lending institutions would want to know how well you do in paying your dues and other credits.
To Keep Records
Along with other purposes, you could also ask for bank statements for record filing. Perhaps you want to be prudent for future needs, and you just want to file your bank statements early on. Further, you can also store away your copy of bank statements for safekeeping.
Are you having issues in managing your cash flows? Do you need a hand in keeping your books and in generating financial reports? 3E Accounting is your solution. We are an established accounting firm specializing in financial statement compilation services and other financial services. Contact us now and let us help you resolve your financial management burdens.