How do I Carry out a Manual Bank Reconciliation?

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1 1/9 How do I Carry out a Manual Bank Reconciliation? Introduction: You need to reconcile, from time to time, the system s view or understanding of your various Bank Accounts status with the reality of that of your live Bank Accounts. Discrepancies between the two can arise because of unforeseen Bank Charges, Interest Rate Changes, Errors, Refused Payments, unanticipated Receipts or inbound Transfers, and so on. Hence the need for periodic Reconciliations perhaps resulting in amendments to the System Bank Accounts or indeed, requests for refunds from the real Bank, or re-presentation of Receipt requests. To access the Bank Reconciliation function Go To Bank Bank Accounts and select the options shown below against the Bank Account you wish to reconcile; This will invoke the following screen which can also be accessed from Bank Bank Reconciliation and select the appropriate Bank Account from the Drop Down list: There are two ways in which you can perform a Bank Reconciliation depending on whether you use printed Statements from your Bank or download or receive an Electronic file from your Bank of your bank related transactions. In this instance Click on Manual Bank Reconciliation. Automatic Bank Reconciliation is dealt with in separate Article. If there is a current open un-reconciled Bank Reconciliation episode for a particular Bank Account then it is not possible to proceed with a new Bank Reconciliation process until this previous one has been resolved and closed. This does not mean, however, that once you have initiated a Bank Reconciliation episode that you must complete it there and then. You can Save it at any stage and return to it later as many times as you want. It only means that you cannot open up a new Bank Reconciliation until the previous one has been fully Reconciled and Closed.

2 2/9 1. Bank Reconciliation using Printed Statements: You need to have the Statement that you received from the Bank to hand when you begin this process. The details from the physical Bank Statement are entered in the top left portion of this screen s Header. Enter the Statement No. (e.g. Page Number), or a unique Reference No. of your own choosing, into the Reference field. Then, enter the Closing Date of the Bank Statement into the To field followed by the Closing Amount as stated on your physical Bank Statement into the Closing field. You now need to ensure that the amount in the Opening field (which is the displayed amount from the previous fully reconciled episode for this bank) corresponds exactly to the opening amount on your physical Bank Statement. If it does not then there is something wrong and it must be resolved before proceeding. Perhaps you are missing a Bank Statement page, or the opening date on your physical Bank Statement doesn t match that of the closing date of the previous Bank Statement? It cannot be because the previous Bank Reconciliation remains unresolved - you cannot commence a new Bank Reconciliation until the previous one is closed. Failure to rectify this issue at this juncture can only compound subsequent reconciliation problems if you proceed further now. The data in the right hand part of the Header portion of this Window are the System s view of the Bank Balance situation as of the To date. The System Details: Balance as at DD Mmm YYYY: is the system s calculated balanced as at this date. If it doesn t match the amount of the Closing field (i.e. the Amount you entered as being the closing amount on your physical Bank Statement) then there is surely a need for a transaction by transaction Reconciliation! (See 3. below). If these two figures do match, then you can invoke the Match All button on the bottom left hand side of the screen followed by Reconcile and Close as in this example of the Bank US Dollar Account which will then complete the reconciliation for that Bank Account.

3 3/9 3. Transaction by Transaction Matching: The other two figures (display only) under the System Bank Balance are the sum of all the System s Unreconciled Receipts and Unreconciled Payments up to and including the To date. As you tick off various transactions during the reconciliation you will see that these diminish in value. To proceed with the transaction by transaction Reconciliation, Click on the View Transactions button. Go through your Bank Statement line by line (which is in the same order as your system presents its transactions i.e. date sequence) and tick off the transactions that match as shown above. When you have finished there are a couple of possibilities remaining as to why there is an imbalance; (i) (ii) (iii) There are transactions on your physical Statement that are not in your System, There are transactions in your System that aren t on you physical Statement, Both. (i) In this example it turns out that there was a Bank Credit for 5.00 on you physical Statement that didn t appear in the System. You now have the opportunity to enter this Bank Charge Refund here from this Window (and many other such Transactions) by clicking on Create Transactions.

4 4/9 To adjust for this particular difference, Click on Bank Debit Journal in order to now enter the Bank Charge Refund against the relevant Bank Charges GL Code; When you Process the Debit Journal the system returns you to the Bank Reconciliation function. (ii) In addition, there appears to be a Lodgement in the System transactions which doesn t appear on your Bank Statement. On investigation it seems that the actual Lodgement in the Bank was made to a different Bank Account in the Bank Branch which now needs to be rectified; On the assumption that the actual physical Bank Lodgement was made to the correct Bank Account and that it is the System which is in error, you now need to correct this issue by making a System Bank Transfer from the one Account to the other (again by using the Create Transactions facility);

5 5/9 Having effected this, the foregoing example shows that the physical Statement and the System s view of the Bank Account are in balance (with no Unreconciled Receipts or Payments) and therefore it is in order to Reconcile and Close this reconciliation episode; 4. Un-cleared Cheques and Miss-Matched Lodgements: There will also, from time to time, be situations where Un-cleared Cheques need to be dealt with: i.e. where you have made Cheque Payments to your Suppliers - but some of which have not yet reached your real Bank Account but which are included in your System as a consequence of the Batch Supplier Payment run.

6 6/9 The Reconcile Button will remain greyed out until such time as the Closing Bank Balance from your Bank Statement is equal to the System s Balance as at DD MMM YYYY (the To date) inclusive of any Unreconciled Receipts and Unreconciled Payments. When this situation arises the Reconcile Button will light up and you can reconcile and Close this Bank Reconciliation episode. Any unmatched Transactions at this stage will then be carried forward and included in the next Bank Reconciliation. Should it turn out subsequently that one or more of these unmatched transactions never enter the real Bank Account (e.g. lost Cheque) then you must subsequently take action to deal with it in both the Bank System and the Creditors or Debtors Ledger as appropriate. Similarly, there will also be occasions where Cheques that you receive from others will be rejected by your Bank for various reasons (e.g. Undated or Unsigned Cheque, or, with a Date which is outside the To date). Where these are included in a System Lodgement you have the facility to Click on the + symbol beside the Lodgement. This will expand the Lodgement and show the individual Cheques making up the Lodgement with the facility to remove the item in question. When you remove the Cheque from the Lodgement it still remains as a Transaction in the Bank Account where you can deal with it subsequently by carrying it forward to a further Reconciliation or by taking appropriate action to Reverse it out of the system.

7 7/9 5. Deleting Transactions: You cannot, as such, delete Transactions in your system s Bank Account but you can Reverse them. To do this Go To Bank Bank Accounts and select View Transactions ; This will bring up the following Window where you can carry out the actions shown; This will cause a Reversal Transaction to be generated in the Bank Account, the Customer s Account (or other originating source) and also in the current open Reconciliation;

8 8/9 For further information regarding the facilities available in the Transaction Viewing Window refer to the Article How do I Use or Personalise my Transaction Browser. 6. Banked and In-Progress Lodgements: You can have a number of Lodgements in progress prior to a Bank Reconciliation. Some of these will be Banked and some may not ( In-Progress ). The system assumes that all Lodgements have been banked and therefore includes them in the system s view of the Bank Balance and Transaction list. As with un-cleared Cheques if you leave any In-Progress Lodgements un-ticked during the Reconciliation process, they will be carried forward to the next Reconciliation. It will, however, considerably ease the Bank Reconciliation process if you keep the number of open In-Progress Lodgements to a minimum. 7. Reconciling your Main Bank Account(s) on a Rolling Basis: One of the ways to also ease the burden of monthly reconciliations is to look up your Bank Account on-line regularly and use this to match transactions on a rolling basis followed by Save. 8. Un-Reconciling a Bank Reconciliation: You must have Administration privileges to access this feature. If you decide to Un-Reconcile an earlier Reconciliation then you should Un-Reconcile all subsequent Reconciliations - as amendments you make to the first one may cause transactions to flow into subsequent reconciliations. You should then, as soon as possible, Re-Reconcile all the Reconciliations that you have re-opened in the correct sequence. 9. Other features & Facilities: You can print the Bank Reconciliation Report either from within the Bank Reconciliation Window or by clicking on the Printer symbol shown above. You can use the Record Notes facility to record and retain notes against a Reconciliation;

9 9/9 The Match All button allows you to selectively match or un-match transactions without having to Tick them off one by one; You can also use the Grid to sort or locate transactions; For example, click on Tran. Type to sort the transaction list by ascending sequence of Transaction Type. Click on it again to sort in descending sequence. Enter a Value (or a partial Value) in the Account Code field to restrict the transaction list to only those transactions which conform. Similarly for all the other fields shown. You can also add Documents (one or more) to a Bank Reconciliation; For further information on this facility refer to the Article entitled How do I Attach Notes and Images to a Document.