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The Lost Art of Reconciling

At Moxy Accounting we recently did an informal poll about the lost art of balancing a checkbook. Katie Scates was taught to reconcile her checking account as a senior in high school. Keeping her checkbook balanced was the prerequisite to receiving her spending money from her parents.


For me, the household task of balancing a checkbook truly hails back to a bygone era. The only other person I know who does this is my 89 year old grandmother; she sits at her kitchen table with her checkbook register, marking a tic when a check has cleared. The poll results pointed to a clear trend; the younger you are the less likely you even own a checkbook, let alone balance it. Online banking automates so many things for us, it seems like a no brainer, but it can also obscure important information.





Technology Won’t Reconcile Without Us


I’m certainly not implying that because no one balances a checkbook, they have no idea about their money. People have ways of keeping an eye on things, checking in and watching their accounts. Especially folks that live paycheck to paycheck, they know exactly how much money they have. And yet, technology can give us a false sense of security and accuracy.


For instance, I finally convinced a friend to start budgeting and she soon discovered that she was paying car insurance for a car that she sold four years ago. She had inadvertently spent $3,000 over the course of four years, completely unbeknownst to her. It was a tricky catch because the charges from the insurance carrier were the same month in and month out, they just came at a faster frequency than they should have and was able to go by undetected.


Not only have we collectively lost the cultural knowledge of balancing our checkbooks, we’ve completely lost the understanding of what it means to reconcile our accounts. Moxy Accounting has regularly run into clients who could read their Balance Sheet and often looked at their Profit & Loss yet had never heard of reconciling their bank accounts in their bookkeeping program.


Cannabis Can’t Always be Digital


When it comes to cannabis accounting and other cash based businesses, we get kicked right back to using paper. It might seem like this is onerous and difficult, but in fact, accountants have a great opportunity to start at the ground level with clients and bring valuable old-school fundamentals. When banking, payroll and merchant services are all stripped away, a cannabis business has to create their own financial structures to record and manage money. Doing that requires knowledge and discipline.


Finding solutions in the cannabis industry for paying sales tax, getting employees paid and efficiently paying vendors are all activities that require accounting solutions that cannot rely on online banking technology. It can be cumbersome but there’s also the opportunity for creating a well oiled machine. An efficient apparatus will have consistent operating procedures to track and monitor money. Then, when it comes to doing the bookkeeping, the documentation is all present to compose accurate financial statements.


The following infographic illustrates good cash management for a dispensary, showing how a well thought out process smooths all accounting functions and provides assurances.





Checking in with your client and asking them about their systems gives you a chance to be a solution provider and bring value to the relationship. It also smooths your processes for handling their bookkeeping and tax work. Top places to check on cash management systems are cash logs, recording expenses and keeping receipts and daily income logs.


The Takeaway


Ultimately, to reconcile is to create checks and balances. The whole point is to know if it’s not right, and when it’s not right, who’s on the hook for the problem. Smart money management increases revenue and helps you sleep at night. Personally, I think bringing some of that discipline and intentional management back to those of us with the privilege of software automatically downloading our bank transactions would be a healthy change. With an ability to truly reconcile your finances, you don’t just assume you know everything is right, but you get the delight of certainty and to me, that’s empowering.


Of course, no one’s running out to get a paper check register anytime soon, and bringing the “R” word (reconcile) back to public vernacular might be a hopeless cause. However, when it comes to cannabis, we’ll keep flexing those basic accounting skills with our clients in hopes that one day they will receive the privilege of integrating technology into their accounting as federally legal businesses. I’d like to think when that day happens, the trailblazers of today’s cannabis economy will have a better footing knowing the ins and outs of cash management and basic accounting skills.


Do you have any awesome systems for cash management or ways to educate clients about the benefits of tracking and money management?


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