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Hi Becky,
If you have recorded all of the cheques issued, then there is nothing more that needs to be done at a year end (or month end etc). The payment has been recorded, meaning that the supplier liability has been updated, expense recorded, and the money has been deducted from the bank balance in the client's books, all as intended. Nothing else is required.
A couple of days after these debits and credits have been recorded, the bank will clear the cheque, meaning that the bank statement will then agree to the client's cashbook balance. This is called "reconciling the bank" or "bank rec (reconciliation)" in bookkeeper speak. You are covering the timing difference between the client handing over a cheque to the payor, and the bank then clearing it.
There are two obvious reasons why preparing a bank reconciliation is important to bookkeepers
1 - a bank statement provides independent evidence of the money movements, other than straight cash in hand.
2- it helps with cashflow control. The client needs to understand that they cannot rely on just the bank balance that they can pull down onto their laptop/mobile, as there may be payments to remember that have not reduced the balance that they see.
The same applies for customer cheques banked. You record and accept the sale and the increased cashbook figure straight away, but the client must appreciate that spending that cheque should only happen when it clears.
Hope this helps your understanding !
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