A bank statement reconciliation Reconciliation process involves comparing the bank transactions recorded in your General Ledger to bank transactions recorded by bank on the bank statement for the same time period. Generally, there are differences in these two sets of transactions are commonplace. Some of transaction differences occur due to different timing, while other type of differences occur due to added bank fees or other reasons.
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Then you will need to specify the date starting which the reconciliations become required and the internal bank documents will be available for reconciliations from this date; the earlier documents will not be involved in reconciliations. For this, use the Bank Reconciliation Start Date field. By default, the field is populated with the current date, however, you can change it for another date. For details, refer to Settings: Money.
To manually indicate for a specific bank account that reconciliations in this account are required, select the Reconcile Bank Statements option in its master record on: Money > Master Data > Bank Accounts. For details, refer to Bank Accounts.
Initially, all transactions associated with the bank account for which reconciliation becomes required will get the Unmatched reconciliation status.
Note. If you select earlier reconciliation start date than the current date, you might need to re-post all the Bank Payments, Bank Receipts, and Money Transfers that were created in the period (time interval) between the selected date and the current date, so that correct reconciliation statuses could be assigned to these documents.
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To manually indicate for a specific bank account that reconciliations are required, select the Reconcile Bank Statements option in its master record on: Money > Master Data > Bank Accounts.
Initially, all transactions associated with the bank account for which reconciliation is required have the Unmatched reconciliation status.
Import of Bank Statements
Each financial period, you can receive statements of your bank accounts and reconcile the received statement statements with bank transactions recorded in your General Ledger. In order to compare the transactions conveniently, you need to create an internal document, Bank Statement, and import the bank transactions from the statement received from the bank.
To create a new Bank Statement document, open: Money > Bank Documents > Bank Statements and click Create on form toolbar.
On the Main tab, specify the banks bank account and the period for reconciliation.
Then, on the Operations tab, click the Import (
) button if you are going to import the bank transactions from the statement. The Import from Excel form appears.
The Import from Excel form
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The data will be imported; otherwise, you will view see the warnings about mismatched data formats. Correct the errors in the input file and import the data again.
Enter the opening and ending balances on the Main tab, save the Bank Statement.
Reconciliation process
The purpose of reconciliation process is matching of all transactions recorded in the bank account.
Create a new Bank Reconciliation document using the form: Money > Service Tools > Bank Reconciliations. For details, refer to Creating a Bank Reconciliation.
The Bank Reconciliation form. The Main tab
- On the Main tab, select the bank account.
- Select a bank statement. Click the Fill in (
) to the right of the Bank Statement field to populate the document with transactions from the selected statement. - The start and end dates of the period under reconciliation appear automatically.
- Click the Auto-Matching settings according to: link in blue font below the dates. The Auto-Matching Settings dialog box opens.
The Auto-Matching dialog box
Depending on document specifics, select the criteria for automatic matching.
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You must select at least one of the following options:
- By Amount. To match a line of the bank statement to an internal document if their amounts are equal.
- By Transaction Date. To match a line of the bank statement to an internal document if they have the same dates. Also, you can specify two tolerance intervals (in days) before and after the transaction date to match the documents by dates within the tolerance interval.
- By Reference No. To match a line of the bank statement to an internal document if they have the same reference numbers.
5. Once you are done with selection, click OK to save the settings and close the dialog box.
6. Open the Matching tab.
7. The left pane shows the Bank Statement lines, while the right pane can be empty.
8. If the right pane is empty, click Fill to populate with internal documents having dates from the start date of reconciliation specified for the bank account or from the start of the period set by using the Set Period (
)
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button on the left pane toolbar.
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The Select period dialog box
9. Click the Auto-Match button to perform automatic matching based on the auto-matching settings shown as a link on the Main tab (under the Start Date and End Date fields). Matched transactions will be shown with green background.
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The system matches any statement line to a bank document which has the same amount, reference number, or date within the tolerance interval depending on which criteria were selected.
The Bank Reconciliation form. The Matching tab
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Then, you can perform manual matching.
Manual Matching
Matching is performed only between objects that are selected in the right pane and objects that are selected in the left panes.
Note. Selected objects are highlighted by using the yellow background. Reconciliation statuses are indicated by the following colors of background:
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Generally, you can match the objects from both sides as follows:.
1. One-to-one matching:
- A single Bank Statement line with Unmatched or Partly Matched status to a single bank document with the Unmatched or Partly Matched status.
- A single bank document with Unmatched or Partly Matched status to a single Bank Statement line with the Unmatched or Partly Matched status.
One-to-one rule: Both objects must be of the same type: either Receipt, or Payment. If the amounts are equal, both objects will get the Matched status. If the amounts are not equal, the object with smaller amount will get the Matched status, while the other one will become Partly Matched. Partly Matched is indicated with a light-green background.
2. One-to-many matching
- A single Bank Document with Unmatched or Partly Matched status to multiple Bank Statement lines with the Unmatched or Partly Matched statuses.
- A single Bank Statement line with Unmatched or Partly Matched status to multiple Bank Documents with the Unmatched or Partly Matched statuses.
One-to-many rule: If on any side, multiple objects are selected, they can be Receipts and Payments, while their total must be of the same type as the object selected on the other side, and the amounts on both sides must be equal.
Viewing the matching results
If you need to check correctness of matching, select the Show Matching Results check box on the tab toolbar.
Then, select either a statement line or a document and click one of the For Bank Statement Line or For Document buttons, respectively.
The Bank Reconciliation form. The Matching tab - viewing the matching results
If you notice an error in matching, select the incorrectly matched line or document and click the Unmatch button to unmatch the bank statement lines selected in the left pane to corresponding documents in the right pane. The status of the involved objects changes to Unmatched.
The totals in the Unmatched Amounts fields at the bottom of each pane are updated accordingly. Then you can match the objects correctly.
Reconciliation statuses of Bank Documents
Once reconciliation became required for a specific bank account form from the selected start date, all later documents associated with this bank account will have reconciliation statuses, one of the following:
- Unmatched: Initially,
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- this status is assigned to all bank documents dated later than the specified start of reconciliations in the bank account. The new documents will get this status by default.
- Matched: This status is assigned during reconciliation process to a document that is full matched to one or several bank statement lines.
- Partly Matched: This status is assigned during reconciliation process to a document that is matched along with other bank documents to single bank statement line.
If the document was fully or partly matched to a line in any bank statement, a special comment (in blue font) will appear in the lower left corner of the form.
The Bank Reconciliation form. The Main tab with reconciliation status indicated
Also, you can view the history of document's reconciliation statuses; for this, click the Reconciliation Statuses of Bank Documents link above the document toolbar.
Related Reports
The Unmatched Bank Documents report contains the list of bank documents with dates within the specified period documents that were not matched to any Bank Statement lines although they have dates within the specified period.
Using the Bank Reconciliation Analysis report with its various filters, you can analyze the issues in reconciliation process if any.
