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Top 5 Reasons Why You Should Care About Check Images on Statements

Sep 19th 2016
Owner FitBooks Pro
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For the last several weeks I have been working on a large bookkeeping project, entering two years worth of a new client’s data into QuickBooks.

This work has been hampered by my not having information on checks written, as the client’s bank statements do not include check images, for any of the three large national banks she uses. Therefore, I have to either ask her for the manual check registers, or lookup each check in her online banking, at three different bank websites.

Some of her banks provide the check images as a link so the checks can be viewed, but this is a tedious and time-consuming process to lookup each check, which also requires my client to provide me her online banking passwords. I could ask her to look them all up herself, but the very fact we are in this situation shows she is not the best candidate to perform this work.

This got me to thinking about bank statements without check images. Banks stopped returning cancelled checks with the mailed statements in 2004 by law, providing instead legal equivalent IRDs or “image replacement documents.”There were many different reasons for the law being enacted, but the bottom line is, passage of the law effectively saved banks billions of dollars in check processing costs. 

Fast forward to today. If your bank statement does not provide check images, you can look at them online, but at many banks, the images disappear or are no longer available after a certain length of time. Do you know what that time period is at your bank? I didn’t think so.

So then you have to call the bank to request that three year old check image, and pay whatever fee the bank imposes for providing that service. Do you know what fee your bank charges for this service, or how long it takes them to get back to you? I didn’t think so. 

To me, this law is entirely to the bank’s advantage, not the consumer’s. Some banks provide the check image on the statement for free. Some banks charge an extra monthly fee for check images, for example, Bank of America charges $3.00 per month. More fee income for banks, how lovely for them.

Top 5 Reasons Why You Should Care About Check Images on Statements

  1. If you need the information, you have to spend time looking up the check image in the online banking, and time is money.
  2. If the check image is no longer available on the bank’s website, you have to request an image be provided to you, often for a fee, and you don’t know how long you have to wait for your bank to comply.
  3. What if your client closes or has already closed their bank account? You may never have the opportunity to contact the bank and request an old check image, or it will be an exceedingly difficult process.
  4. If you are doing a large data entry project, and all you have is the check number and the amount from the bank statement, but not the payee or the check date, you cannot enter accurate data into the books. Even if you have bank feed downloads, you will not have the missing information and will be guessing about when a check was written and what it was for.
  5. If you don’t have check images for prior years, your document set is incomplete and does not comply with document retention standards.

I suggest you spend the effort to request check images on the statements of all your client’s checking accounts, and for your own practice (and personal) checking accounts as well, even if there is an additional fee involved. The effort you spend now may well save you, or your client, time and money down the road.

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CPA, Tax, Accounting
By Pbrar
Oct 9th 2016 00:59

Great article Jody!
I agree with you 100% the importance of check images are part of your bank statements and business / personal records.
I feel everyone should ready this article and learn from it and save time and money down the road...I ensure all my clients have check images saved somewhere each month.
Best and most efficient way to achieve this for my clients and for us is when we Fitch bank statements directly & automatically from the bank thru Hubdoc each month. This way we have copy of a clean bank statement, deposits and checks written organized separately.
Pam Brar, CPA
Optimize Accounting Solutions

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Jody Linick
By Jody Linick
Oct 26th 2017 16:28

I am adding a 6th reason: fraud prevention control. Business owners need to look at the cleared checks each month, to ensure there was no behind-the-scenes monkey business by a fraudster bookkeeper. Embezzlement can occur when a bookkeeper writes a check or makes a payment to him/herself, or to a personal credit card or other vendor, then later changes the check payee in QuickBooks so the payment looks legit. However, a review of the actual check image reveals the real payee. Reviewing the cleared checks is an important fraud prevention control, and should probably be #1 on this list!

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