About Bank Reconciliation

Bank reconciliation is the process of comparing and matching FinancialForce transaction Closed A record created when documents are posted to the general ledger. Transactions must balance (sum to zero) in home, dual, and document currency. values against those shown on a bank statement in order to uncover any possible discrepancies. Any transactions found on the bank statement are said to be reconciled, while those not found are said to be outstanding.

Discrepancies could include:

A check issued to a vendor Person or company that sells goods or services to your organization., but not yet presented to the bank.
A deposit paid in at the bank, but not yet shown on the statement.
A payment taken directly from the bank account, such as a bank charge.

A bank reconciliation done regularly can reduce the number of errors and make it easier to find missing payments and deposit

Note:

You cannot part-reconcile a transaction. If the value of the transaction does not match the value shown on the bank statement, you must post an adjusting journal Closed A document that enables you to make corrections or adjustments to your existing accounting data. or cash entry Closed A record of money received from, or refunded to, your customers, often in the form of cash or a check. Also used to record payments to and refunds from vendors..

Transaction lines that belong to a payment that has been, or is being, canceled, are excluded from the bank reconciliation process.

If you want the journal to appear on a bank reconciliation, you must select a line type of "Bank Account" and then provide the name of the related bank account.

Creating an Opening Balance

The opening balance for a new bank reconciliation is taken from the closing balance of the previous bank reconciliation record.

If you want to perform a bank account's first FinancialForce bank reconciliation, you must supply a value the application can use as an opening balance.

You do this one of the following ways:

Create and post a journal to post the opening balance to both the bank account and the associated general ledger account. Use a line type of Bank Account. Then select the resulting transaction in the first reconciliation.
Create an opening bank reconciliation record with an appropriate closing balance first. It is helpful to name this record something like "Starting Position" or "Opening Balance".

You must use the journal method if you want the opening balance to be available to standard bank reconciliation reports.

Each time you must manually commit this first bank reconciliation before continuing.

Performing the Reconciliation

FinancialForce Accounting provides two ways to perform a bank reconciliation:

Manual Bank Reconciliation

To start a manual bank reconciliation, choose the bank account that you want to reconcile from the Bank Accounts tab. Then, on the bank account detail page, click New Reconciliation to create a new reconciliation for this bank account.

Note:

You cannot start a new reconciliation for this bank account until the current one has been committed, canceled or deleted.

Bank Charges and Interest

As part of the bank reconciliation process, you can record any bank charges and interest shown on the bank statement. When the reconciliation is committed, the application automatically creates and posts the corresponding journals.

See Recording Bank Charges and Interest for more information.

Committing a Manual Bank Reconciliation

Clicking the Commit button on the detail page of an "In Progress" bank reconciliation, sets the bank reconciliation status to "Complete", and also performs the following tasks:

A single bank reconciliation journal is created and immediately posted for all the specified bank/interest charges.
All the new bank transaction line items created by this are updated with a reference back to the reconciliation.
Bank reconciliation line items are created for the selected transaction lines to associate them with the reconciliation. All new bank transaction and bank reconciliation line items are now reconciled.
The temporary bank charges line items are removed from the bank reconciliation, because the new bank reconciliation line items replace them.

Reopening a Manual Bank Reconciliation

Clicking the Reopen button on the detail page of the most-recently completed bank reconciliation, resets its reconciliation status back to "In Progress" so that it can be edited or deleted. The associated transaction line items also have their reconciliation status reset.

Note:

You cannot reopen a previous reconciliation if there is a reconciliation "In Progress" for that bank account. Reopening must be done in reverse chronological order.

Automatic Bank Reconciliation

An automatic bank reconciliation is a two-stage process:

Import your bank statement details. See Importing Bank Statement Details.
Reconcile existing transactions against items on a bank statement. See Reconciling your Bank Statement Automatically.

Automatic selection criteria

When you first run the automated reconciliation process, Exact Auto-Match automatically selects transactions based on value, date, and reference. Only transactions that match all three criteria are selected.

Using the Auto-Match Settings, you can change the criteria used to select transactions for matching. You can choose one of the following methods:

Exact Auto-Match. Allows you to select up to 5 bank statement and transaction fields that you want to match.
Suggested Auto-Match. Allows you to select up to 5 bank statement and transaction fields that you want to match, the criteria you want to use for matching, and the priority that you want to assign to each match.

You can set your Auto-Match Settings as defaults.

Reopening an Automatic Bank Reconciliation

Reopening an automatic bank reconciliation, so that you can edit or remove reconciled lines, is also a two-stage process:

Reopen the bank reconciliation record, as described for a manual reconciliation earlier in this topic.
Click Reopen on the related bank statement detail page. This resets its status back to "In Progress" so that it can be edited or deleted. The associated bank statement line items also have their status reset.

Once you have reopened both objects, you can edit or remove lines as required.

Note:

The Bank Statement and corresponding Bank Reconciliation records are linked. However, their lines are not. When you delete a bank reconciliation line item from a reconciliation record, you must set the status of the corresponding bank statement line item back to "Imported". The line will then be available in the Bank Statement Lines list to reconcile again.

Status: Bank Statements

Status	Description
Committing	The reconciliation is in progress and lines are being committed. Further bank reconciliations for the same bank account are prevented.
Imported	A bank statement import file has been uploaded, but the reconciliation has not started.
In Progress	The reconciliation is in progress. Further bank reconciliations for the same bank account are prevented. You cannot delete an "In Progress" bank statement without deleting the associated bank reconciliation first.
Reconciled	The reconciliation is complete.

Status: Bank Statement Line Items

Status	Description
Imported	A bank statement import file has been uploaded, but reconciliation has not started.
In Progress	The reconciliation is in progress.
Reconciled	The reconciliation is complete.

Reconciliation Status: Bank Reconciliations

Status	Description
Committing	The reconciliation is in progress and lines are being committed. Further bank reconciliations for the same bank account are prevented.
Complete	The bank reconciliation has been committed and cannot be edited. You can reopen a "Complete" reconciliation, which will return its status to "In Progress".
In Progress	The bank reconciliation has been saved but has not been committed, or it has been reopened.
Reconciling	The selected transaction lines are being reconciled to the bank statement. Once the reconciliation is complete, the status is set to "In Progress".