There’s An Easier Way To Do A Monthly Reconciliation

  Mike Bachara   |     Nov 03, 2020

Improve Autoparts Inventory ReconciliationAre recurring discrepancies a problem for your automotive parts inventory? It’s a problem many Parts Departments must deal with. Luckily, there is an easy way to improve …

And that’s monthly reconciliations. 

Most Parts Departments only reconcile their accounts once a year. But to pinpoint recurring issues, you need to reconcile your automotive parts on a more regular basis. This helps uncover patterns and makes it easier to find the source of discrepancies because everything happened within the last month. 

Having your team count your inventory 12 times a year is impractical. Luckily, you don’t have to do a physical count to conduct a reconciliation. 

Not sure how that is possible? Let’s look at how to reconcile your accounts without the frustration of counting each individual part.

4 Steps For Conducting A Monthly Reconciliation 

  1. Assume Your Physical Accounts are Accurate 

While this goes against everything you think you know about inventory, when conducting a monthly reconciliation, you do not physically count your stock. You will assume that your physical counts are correct. 

You’re only comparing your ledgers and the reconciled items, such as parts received that have not been invoiced, parts invoiced and not received, pending credits, open repair orders, counter tickets, dirty cores, etc.

It’s not uncommon for there to be discrepancies between your inventory general ledger (G/L) and sub-ledgers. Human errors happen, and you want to catch and correct them in a timely fashion. 

  1. Compare Your Ledgers to Your Documentation 

Gather your reconciling documents and compare them to your ledgers. You will want to look at …

  • parts received and not billed
  • parts billed and not received
  • pending credits 
  • open repair orders, counter tickets, etc 
  1. Identify and Source Discrepancies 

If a discrepancy exists between your G/L and sub-ledgers, you will want to proceed with analyzing your accounts to determine the sources of the differences.

What you are most often looking for during your monthly reconciliation is errors that occur when inputting data into your system which include, but are not limited to:

  • Incorrectly calculating totals.
  • Missing invoices or credits.
  • Entering invoices or credits twice.
  • Transposition of numbers.
  • Choosing the wrong account or source.
  1. Make Adjustments 

Depending on the type of error and where it occurred, you will want to adjust your sub-ledgers and general ledger, accordingly. Once the adjustments have been made, verify that your accounts are now balanced.

Guide to Optimizing Inventory MGMT

Reconciling your inventory records is important. It helps reduce preventable errors, which means less time will be spent analyzing and correcting your books. It can also be an effective tool for determining whether your employees are following accounting best practices and will ensure they are not taking shortcuts. 

It will also help you determine whether your administrative staff are properly equipped and trained to be managing your books. If not, you can take the necessary steps to ensure that they are. 

If you feel that you do not have the resources to complete these reconciliations, consider hiring a third party. They will act as an unbiased reconciler, offering transparency and minimizing disruptions within the administrative department.

At Pro Count West, we have the knowledge and experience to efficiently reconcile your books and quickly identify the sources of your discrepancies. If you would like to have us perform a reconciliation of your inventory accounts, contact us today!

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By Mike Bachara

Mike Bachara | Owner of Pro Count West
Mike Bachara | President Pro Count West

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