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Reconciling a Bank Account

A bank reconciliation proves that a bank account in the ledger agrees with the bank's own statement. You match statement lines to ledger lines (automatically, by hand, or by creating the missing journal for a fee or interest), and complete the reconciliation when the difference is 0.00 and no statement line is left unexplained. The month-end close checks for a completed reconciliation on every bank account.

Where to find it

Admin Panel → Finance:

  • Bank Feeds & Reconciliation — the Reconcile tab; its badge counts bank lines not yet reconciled

Architect Panel → ERP - Finance:

  • Bank Reconciliation — opens the same console on the Reconcile tab

Starting a reconciliation

  1. Open Reconcile and choose the Bank account.
  2. Under Start a reconciliation, choose an imported Statement, which fills in its date and closing balance, or choose type the balance from a paper/PDF statement and enter the Statement date and Closing balance.
  3. On an account's first reconciliation, also enter the Opening balance from the statement. Reconciliation starts at the earliest statement line, and the ledger before that must agree with this opening balance.
  4. Press Start. The screen shows Statement lines not yet matched beside Ledger lines not yet matched.

Matching

  1. Press Auto-match. It pairs lines by amount, date and reference within the Date tolerance (days) and Amount tolerance you set, and matches only what it is confident of.
  2. For the rest, tick lines on both sides and press Match selected. One statement line can match several ledger lines and the other way round; the ticked lines must balance.
  3. Where matched lines differ by a small exchange, fee or rounding amount, choose an account under Post a difference to. Only a small difference is accepted (at most 1.00 or 5% of the statement amount, whichever is larger); anything larger is a missing or wrong entry.
  4. For a statement line with nothing in the ledger, such as a bank charge or interest, press Create journal on it, choose the account, VAT and analysis, and press Post journal. It posts and matches in one step.
  5. Lines posted from the feed queue are already matched to their statement line.

Matched in this reconciliation lists every match with how it was made: auto, by hand, posted here, or journal created. Undo takes a match apart.

The proof and completing

The proof runs from the first statement the account was reconciled with: the bank balance then, plus the ledger movement since, less unpresented ledger lines, plus statement lines not in the ledger, gives the Expected statement balance. The Difference is the statement closing balance less that.

  1. When the difference is 0.00 and no statement line is unmatched, the screen says the ledger agrees with the statement.
  2. Add any Notes and press Complete reconciliation. The matched ledger lines are marked reconciled and the statement is locked.
  3. Press Report for the printable reconciliation: the proof, unpresented ledger items, statement lines not in the ledger, and every match.

Unpresented ledger lines, such as a cheque not yet cleared, are normal and carry forward. Discard abandons an unfinished reconciliation; journals already posted stay posted. The latest completed reconciliation can be reopened with Reopen; its lines stop being marked reconciled until it is completed again. Reconciliation history lists every reconciliation of the account.

Foreign-currency accounts

An account kept in the company's own currency is proved on its own-currency amounts; one kept in another currency is proved in the statement's currency. Revaluation journals are left out of a foreign account's proof, because they change its value, not its cash. Only the company's primary book is read.

What goes wrong

  • Complete is greyed out: hover over it to see why. Usually a statement line is still unmatched.
  • The opening balance does not follow on from the previous closing: a statement is missing between them.
  • A difference that will not clear: a statement line was posted twice. The queue's Already in the books? warning is there to prevent it; match the line to the existing entry instead.

Worked example

For September the bookkeeper chooses the imported statement closing at 48,210.55. Auto-match pairs 196 of 204 lines. Five receipts paid two invoices each, so they match them by hand. Two lines are a bank charge and loan interest: Create journal posts them. The last line is 1,000.00 against a ledger receipt of 1,003.00; they match both and post the 3.00 difference to bank charges. The difference reads 0.00, they complete the reconciliation and print the report for the month-end file.

Recommendations

  • Reconcile every account monthly, to a statement dated at or just before the month end.
  • Run Auto-match first, then work the exceptions.
  • Never post over a large difference: find the missing entry.
  • Keep the printed report with each month's close.