Reasons for Bank Reconciliations

Periodically, you need to reconcile your Bank Accounts status in the system with that of your live Bank Accounts. This may result in amendments to the System Bank Accounts or requests for refunds from the real Bank, or re-presentation of Receipt requests. Discrepancies between the two can arise because of:

• Unforeseen Bank Charges
• Interest Rate Changes
• Errors
• Refused Payments
• Unanticipated Receipts
• Inbound Transfers

Manual vs Automated Reconciliation

The Bank Reconciliation facility allows you to reconcile your bank accounts to the Statements you receive from the bank. You can do it either:

• Manually (described here): Use a printed Bank Statement. Choose a date up to which you wish to reconcile your bank according to your bank statement and enter opening and closing statement balances. Then match the transactions in your statement with the transactions returned by the system. If you have several transactions making up a lodgement, you can match the individual transactions in the system with a lodgement record on your statement.
• Automated: If your bank provides electronic bank statements via online banking, you can import them and perform automatic reconciliation using 'matching' rules or offering matching suggestions. If no match is found, you can post the transaction directly. See Generating Bank Statement Files (Online Banking) or Generating Bank Statement Files (AutoRec)  and‍ Automated Bank Reconciliation.‍ 

Supplementing the Reconciliation process

Full bank reconciliation can be supplemented by interim (daily, bi-weekly, or weekly) matching of records, whether using imports or manual matching. This will match many transactions, resulting in a significant workload reduction compared to a full Bank Reconciliation. It also allows for immediate response to any discrepancies, such as refused Receipts or Shortfalls, much closer to the point in time at which they arise. 

However, it is still important to perform a full Bank Reconciliation process regularly, especially to produce Management Accounts.

Bank Reconciliation Schematic Overview

See:

Bank Reconciliation (Manual) (6A.6) - AIQ Academy

Bank Feeds (6B.1) - AIQ Academy

Importing bank statements manually (6B.2) - AIQ Academy

If you have been using the Bank Import facility you must clear all remaining transactions before commencing a full Bank Reconciliation. 

1. Go to Bank > Import bank Transaction. 
   
2. If you receive a warning message, click Clear Imported Transactions before proceeding with the Bank Reconciliation.

Have the physical Bank Statement to hand when you begin the reconciliation process. Once you open a Bank Reconciliation, you can save it at any stage and return to it later.

Step One: Begin a Bank Reconciliation

Go to Bank > Bank Reconciliation.Alternatively select Bank Accounts. Go to Reconcile Now. If there are any unreconciled episodes, these will appear under Current Reconciliation and must be completed first before you can use Create New Reconciliation.

Complete the following header details:

• Bank: In the Bank dropdown, select a bank.  If the Bank Account has a current open Bank Reconciliation episode, you will be warned. If you selected a bank from the Bank listing grid, this field will be auto filled.
• Reference: Enter the Bank Statement No. (Page Number), or else a unique Reference No. of your own choosing.
• To: Enter the Closing Date of the Bank Statement.
• Opening: This is the amount from the previous fully reconciled episode for this bank. Ensure that it corresponds exactly to the opening amount on your physical Bank Statement. If it does not, resolve it before proceeding. 

  Warning

  Failure to rectify previous reconciliation issues compounds subsequent issues. Possible causes include a missing Bank Statement page or the opening date on your physical Bank Statement not matching the closing date of the previous Bank Statement.

   
• Closing: The Closing Balance from your Bank Statement should be entered here. This will become your Opening Balance for the next bank reconciliation.
• Movement: The difference between the Opening and Closing Balances will be displayed here. This value is calculated by the system and cannot be changed by the user.
• View Transactions: Click this if you want to update the list of transactions to be reconciled, for example if the date of your reconciliation has been changed.

Step Two: Match Transactions

The header contains informational-only fields. The values displayed here will inform whether all transactions have been matched for this bank. If they have not, you will have to match remining transactions individually (see below) or may have to create transactions to balance the system. (see next section).

• The Balance appears as of date selected for this reconciliation.
  • If this doesn’t match the Closing amount as of the same date, you need tomatch transactions individually (see below). 
  • If this matches the Closing amount, go to Match all transactions (current page)/ (all pages) and use select or deselect transactions as needed. The selected transactions will be marked as matched for future reconciliation. This does not mean that they are reconciled but rather marked to be reconciled. After making your selection, click Save.
• Unreconciled Receipts and Unreconciled Payments will have values of zero if all transactions reconcile. As you match transactions, you will see these numbers decrease.
  • Unreconciled Receipts are the sum of all Receipts/Lodgements that were recorded in the system but have not gone through your bank account and so could not be reconciled.
  • Unreconciled Payments are the sum of all Payments that were recorded in the system but have not gone through your bank account and so could not be reconciled. 

To match transactions individually:

1. Click on View Transactions. 
2. If you have been using the Bank Import facility or matching transactions regularly, many transactions will display as matched. To view the remaining unmatched transactions, select Un-Matched in the Matched column.
3. Go through your printed Bank Statement and check transactions off in the Matched column as you encounter them.

Use Record Notes if you need to record a note against the Bank Reconciliation. The list of all notes held against a Bank Reconciliation can be found in the Bank List by going to Reconcile Now > All Reconciliations. 

Use Print Reconciliation Report to view a list of Reconciled and Unreconciled transactions for this Bank Reconciliation. 

Click on Reconcile when ready to complete this reconciliation.

When you have completed the process, imbalance can remain for one or both of the following reasons:

• There are transactions on your physical Statement that are not in your system.
• There are transactions in your system that are not on your physical Statement.

Creating Transactions

1. Go to Create Transactions. This lets you create transactions that are missing from your Bank GL Account. Select the appropriate transaction type - Bank Debit/Credit Journal, Sundry Bank Payments/ Receipts, Bank Transfer, Record Supplier Payments, or Customer Receipts.
2. Enter the details in the screen and click Process. This will update the Bank Reconciliation screen.
3. When you have accounted for all discrepancies, click Reconcile. Once the statement is reconciled it cannot be edited again.

Uncleared Checks

You will occasionally have to deal with uncleared checks. This happens when you make Check Payments to your Suppliers and include them in a Supplier Bulk Payment run despite not being completely processed by your real Bank Account.

Reconcile will remain greyed-out until the Closing Bank Balance from your Bank Statement is equal to your Bank GL Account inclusive of any Unreconciled Receipts and Unreconciled Payments. When the balance matches, you can click Reconcile. The Bank Reconciliation will be marked as reconciled and will only be editable by Admin users.

Any unmatched Transactions at this stage will then be carried forward and included in the next Bank Reconciliation. If any of these unmatched transactions never enter the real Bank Account, such as a lost Check, then you must deal with it in both the Bank System and the Payables or Receivables Ledger as appropriate.

Mismatched Deposits

There will be occasions where your bank will reject checks that you receive for various reasons, such as being undated, unsigned, or with a date that is outside the To date. 

When these are in a System Lodgment, you can click the + plus symbol next to it in the Bank Reconciliation screen. This will expand the Deposit to show the individual Checks it includes. Click Remove needed, then Save.

When you remove the Check from the Lodgment it remains as a Transaction in the Bank Account. You can deal with it by carrying it forward to a further Reconciliation or by reversing it out of the system.

In Progress Deposits

You can have several Lodgments in preparation prior to a Bank Reconciliation, some banked and some in-progress. The system assumes that all Lodgments have been banked and therefore includes them in the Bank Balance and Transaction list. 

As with uncleared checks, if you leave any In-Progress Lodgments unmatched during the Reconciliation process, they will be carried forward to the next Reconciliation. To ease the Bank Reconciliation process, keep the number of In-Progress Lodgments to a minimum.

If a System Transaction differs from the Bank Statement and you believe the Bank Statement is correct, then you can amend the system transaction. This will correct the transaction, not only in the system Bank Account but also in the associated Customer, Supplier and GL Accounts. 

Reverse a Transaction

Transactions cannot be deleted in your system’s Bank Account but can be reversed.

1. Open the Bank Reconciliation screen with the relevant bank account.
2. Find the transaction and click Int. No. to open the Transaction Details screen.
3. Click the eraser icon to make certain edits.
4. Click Reverse to reverse the transaction in the Bank account and the originating Customer or Supplier Account.

See:

‍ Amend, Cancel or Delete Transactions‍

If you decide to un-reconcile an earlier Reconciliation, such as several previous generations ago, you should Un-Reconcile all subsequent Reconciliations as amendments you make to the earliest ones may cause transactions to flow into subsequent reconciliations. 

To view past reconciliations:

1. Go to Bank > Bank List and find the account. 
2. Under Reconcile Now, select All Reconciliations.
3. This will bring up a list of previous reconciliations. Uncheck Reconc. and confirm that you will proceed with the un-reconciliation.
4. As soon as possible, Re-Reconcile all the Reconciliations that you have re-opened in the correct sequence.