Ian Fincher on Why Most Small Businesses Get Reconciliations Wrong

Ian Fincher

There's a conversation Ian Fincher has at least once a month. A business owner calls, panicked, because their bank balance doesn't match their books. They've been ignoring it for eight months.

Now they're facing an audit.

Ian Fincher asks the same question: "When was your last reconciliation?"

The answer is rarely good.

Most small businesses don't reconcile. Not because they don't understand it. Because it feels tedious, and they're swamped, and they figure "close enough" is good enough.

Until it isn't.

The reconciliation nobody does until the IRS knocks

A maritime business owner in New Orleans runs a tight operation. Three employees, regular clients, steady cash flow. No accountant on staff.

Just QuickBooks and a spreadsheet for tracking what matters.

One year, the IRS audit notice arrives. Suddenly, they need to prove that their recorded income matches their actual deposits. They dig through bank statements.

They find deposits they never recorded. They find expenses they recorded twice.

It takes weeks. It costs money. And it was completely preventable.

Monthly reconciliation is the single most important preventive measure for small business accounting. Ian Fincher doesn't see this as optional. He sees it as the difference between "I know where my business stands" and "I'm flying blind and hoping nothing crashes."

Three mistakes that compound into nightmares

The first mistake is waiting too long. You reconcile in April when you should reconcile every month. By then, you've forgotten why a $400 charge hit the account in February.

Was it legitimate? Was it an error? You have no idea anymore.

The second mistake is being incomplete. You reconcile the bank account but forget about credit card statements, loan payments, transfers between accounts. Your books say $50,000 cash on hand.

Your actual available cash is $35,000. The difference is sitting in deposits you never acknowledged.

The third mistake is ignoring the unexplained discrepancies. You find a $200 difference and move on. Ian Fincher would stop.

That $200 might be a data entry error. It might be fraud. It's definitely not supposed to be there.

Any one of these mistakes is manageable. All three together? That's how businesses lose track of reality.

Why Ian Fincher insists on monthly reconciliations

Ian Fincher recommends monthly reconciliation for one simple reason: it's the only way to catch problems while they're still small.

A nonprofit in Orleans Parish receives funding from multiple government sources. Each month, they deposit checks from the state, grants from foundations, donations from individuals. They also spend on salaries, program services, overhead.

If nobody's checking whether the bank balance matches the accounting records monthly, then by year-end, they might have spent $50,000 they didn't actually have. The error gets discovered during the Single Audit. Now there are compliance questions that could have been avoided.

Ian Fincher uses QuickBooks to pull a bank reconciliation report every month. He compares it to the actual bank statement. Anything that doesn't match, he investigates immediately.

Not in six months. Now.

This is especially important for businesses with multiple users. If two people can enter transactions in QuickBooks, you need monthly verification that they're both doing it correctly.

The tools that make reconciliation actually fast

Ian Fincher specializes in QuickBooks Online and Desktop. Both have built-in reconciliation features that automate most of the work.

In QuickBooks Online, you literally let the system match your bank transactions to your recorded deposits and expenses. You review the matches, approve them, and move on. The whole process takes 15 minutes for most small businesses.

The mistake most owners make is reconciling too late in the month or year, when they've forgotten what all the transactions were. Ian Fincher recommends doing it by the 5th of the next month while the bank statements are fresh.

He also recommends marking everything clearly. If a check is outstanding, mark it as outstanding in QuickBooks. If a deposit hasn't cleared, note it.

Don't record transactions that haven't actually happened yet.

That discipline saves hours of chasing ghosts later.