Bank Reconciliation

Bank reconciliation is the process of comparing the company’s bank statement with its internal records of transactions to ensure accuracy. The goal is to verify that all transactions recorded in the company’s books align with those reported by the bank. This process helps identify discrepancies and maintain accurate financial records.

To begin the reconciliation process, click on the Reconcile tab at the top of the screen. This action will bring you to a page displaying a list of all past reconciliations recorded in the system. Each reconciliation entry provides a summary of details and history, allowing you to keep track of completed reconciliations.

Each entry is organized into two main columns: Amount and End Date. The Amount column shows the actual balance of your bank account at the time of reconciliation, giving you a snapshot of the account’s financial standing when it was last balanced. This is essential for verifying that the company’s internal records match the bank’s reported balance accurately. The End Date column indicates the cut-off date for the reconciliation, meaning any transactions recorded after this date are not included. This date helps define the exact period covered, ensuring that you are only working with transactions recorded up to that point, which prevents potential discrepancies.

Viewing and Downloading Reconciliation Reports

On the far right of each reconciliation entry, you will find a Report button.

Clicking this button opens a detailed report panel, providing an in-depth summary of the reconciliation process, including any discrepancies or adjustments that may have been made. This report allows you to review the reconciliation’s accuracy and completeness, offering valuable insights into the matching process. If you entered any amount in the Bank Error box during the reconciliation and need to inform the bank of the discrepancy, you can generate a document by clicking the Report button. This document, which includes details of the discrepancies, can be downloaded by clicking the Download button at the top of the report panel. Once downloaded, you can send this report to the bank to request a correction in their records. You may also save or print a hard copy of this PDF for your records.

Starting a New Bank Reconciliation

To initiate a new reconciliation, click the New button at the top right of the screen. Begin by entering a name for the reconciliation in the designated box. From the Bank drop-down menu, select the specific bank account you wish to reconcile. In the Amount box, enter the ending balance as stated by the bank. Next, select the End Date that reflects the final date of transactions included in the reconciliation. After completing these fields, click Save to create the new reconciliation record.

Performing the Reconciliation

Once saved, you will be directed to the Reconcile page. To perform the reconciliation, you will need your bank records to compare them with the transactions in your accounting books. At the top of the Reconcile page, you will see the reconciliation details, including the Name, Bank, and End Date. Below, three boxes are lined up horizontally, displaying key balances: the Bank Ending Balance reflects the final amount per the bank’s report, while the Book Ending Balance shows the final amount recorded in your accounting books. The goal of the reconciliation process is to make the Bank Ending Balance equal the Book Ending Balance, achieving balanced records.

Handling Discrepancies in Bank Records

If you encounter any discrepancies between the bank’s records and your books, enter the difference in the Bank Error box located in the middle of the three boxes. This box allows you to log any errors you believe exist in the bank’s records, which can later be reported to the bank for correction.

Reviewing and Clearing Transactions

Below the balance summary, you will find a list of all transactions recorded in your accounting books. Carefully compare each transaction with those in your bank statement. For every matching transaction, tick the checkbox beside it, confirming that it aligns with the bank’s records. After reviewing and matching all transactions, click the Clear button at the top of the page. If you identify additional discrepancies, input the amount in the Bank Error box and make any necessary adjustments to the transactions in the software.

Finalizing the Reconciliation

Once you have completed the review and confirmed that the debits and credits match, click the Save button located on the right side of the screen to finish the reconciliation process. This action will finalize the reconciliation, updating your records to reflect the verified balance, ensuring the financial integrity of your accounts.

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