Bank Reconciliation

A bank reconciliation is a process used to make sure that a company's financial records match the bank's records. In other words, it's a way to check if the amount of money the company thinks it has in its bank account matches the amount of money the bank says is in the account.

To carry out an effective bank reconciliation, it's recommended to have the bank statement for the period you're reconciling and to have recorded all the transactions for that period in Cashflow.

1. Reconcile a Bank Account

To reconcile a bank account, follow these steps:

1. Navigate to the main menu, select Bank, and then click on Reconciliations.
2. In the list of Reconciliations, click on Create (reconcile).
3. In the window that appears, select the account, enter the ending balance, the date of balance, and write any necessary notes.
4. Click on Start Reconciliation to begin the process.
5. On the Bank Reconciliation screen, review and mark the transactions that match those in your bank statement.
6. Tip: You can use the search field to find transactions more easily or use the filters (All, Payments, Deposits) to organize the transactions.
7. As you mark the transactions, the difference should decrease until it reaches zero ($0.00), indicating that the reconciliation has been done correctly.
8. If you need to change the ending balance or date, you can do so by clicking on Edit Info.
9. If there are still differences after reviewing the transactions, you can choose to Save and Continue Later.
10. If there are no differences, you'll have the option to Save and Finish, indicating that the reconciliation has been successfully completed.

Tip: Remember that you also have the option to start a bank reconciliation from the Banks > Bank Accounts section. Within this section, when viewing the list of accounts, you can initiate the reconciliation process by clicking on Reconcile in the status column corresponding to the account you want to reconcile.

2. Editing a Reconciliation

You can continue working on a bank reconciliation (edit) by following these steps:

1. Navigate to the main menu, select Bank, and then click on Reconciliations.
2. In the list of Reconciliations, locate the reconciliation you want to edit from the list.
3. Click on the actions menu (three horizontal dots) and select Edit.
4. Make the necessary changes.
5. If there are still differences after reviewing the transactions, you can choose to Save and Continue Later.
6. If there are no differences, you'll have the option to Save and Finish, indicating that the reconciliation has been successfully completed.

3. Void a Reconciliation

If you wish to void a reconciliation to redo it, follow these steps:

1. Navigate to the main menu, select Bank, and then click on Reconciliations.
2. In the list of Reconciliations, find the reconciliation you want to cancel from the list.
3. Click on the actions menu (three horizontal dots) and select Void.
4. You will be asked to confirm the action.

4. List of Reconciliations and Options

The deposits module provides a list of all registered deposits and a set of options in the action menu (three horizontal dots) for each transaction. These options allow you to manage and track each transaction easily. The options in this menu include:

1. Preview
   ‍This option allows you to preview the document as it would appear once printed.
   ‍
2. Edit
   ‍This option allows you to edit and continue working on an open bank reconciliation.
   ‍
3. Upload File
   ‍You can add files related to the reconciliation, such as the bank statement.
   ‍
4. Send by Email
   ‍This option allows you to directly send the reconciliation to a third party via email.
   ‍
5. Audit
   ‍The audit feature displays the changes made to the document, enabling detailed tracking of modifications.
   ‍
6. Void Document
   ‍If you need to cancel a reconciliation, you can use this option.
   

Tips & Best Practices

Bank reconciliation is a crucial process to maintain proper financial health. It's a checkup that ensures your company's financial records match those of the bank. This way, you ensure that the amount of money you think you have in the account is the same as what the bank reports.

To conduct an effective reconciliation, here are some tips and best practices:

1. Prepare Before Reconciliation
   ‍Make sure to have the bank statement for the period you're reconciling at hand and record all transactions for that period in Cashflow before you start.
   ‍
2. Monitor Your Transactions
   ‍Once you've reconciled an account for a specific period, transactions cannot be edited or canceled without reopening the reconciliation. This ensures data integrity and prevents discrepancies.
   ‍
3. Utilize Search and Filtering Tools
   ‍Use the search field and available filters (All, Payments, Deposits) to locate transactions more easily and efficiently.
   ‍
4. Edit When Necessary
   ‍If you find discrepancies or need to adjust the ending balance or date, you can edit the information at any time.
   ‍
5. Save and Finish Only When Sure
   ‍When the difference between the bank balance and your record balance is zero, you can save and conclude the reconciliation. If there are still differences, it's better to save and continue later.
   ‍
6. Void and Start Over if Needed
   ‍If you made a mistake during reconciliation, don't worry. You can void the reconciliation, and all associated transactions will be available for selection in a new reconciliation.
   ‍
7. Track Reconciliations from the List
   ‍In the reconciliation list, you have options to view, edit, upload files, send by email, audit, and void.
   ‍
8. Ensure Proper Transaction Associations
   ‍Remember that transactions associated with a bank reconciliation will not be available for selection in future reconciliations. Ensure transactions are correctly associated before finalizing.

By following these tips and best practices, you can ensure that your bank reconciliation is carried out effectively and efficiently, helping you maintain accurate and up-to-date financial records.

Common Issues

Performing a bank reconciliation can come with some common challenges. Here's a list of problems you might encounter and suggestions on how to handle them:

1. I Have Discrepancies in My Reconciliation
   ‍It's common to have differences between your records and the bank statement initially. This can be due to data entry errors, forgotten or unrecorded transactions, or pending payments. Carefully review all your transactions and ensure they are correctly recorded.
   ‍
2. Reconciliations Automatically Reopen
   ‍If you edit or void a transaction associated with a bank reconciliation, the reconciliation will reopen automatically. This is to ensure the accuracy of your records. If you make changes to a reconciled transaction, be sure to review and update the corresponding reconciliation.
   ‍
3. I Have Duplicate Transactions
   ‍Sometimes, a transaction may be entered more than once by mistake. This can lead to discrepancies in the reconciliation. If you spot a duplicate transaction, remove the duplicate and reconcile again.
   ‍
4. Date Errors
   ‍Some discrepancies can result from errors in the transaction dates. Verify the dates of your transactions and correct any errors you find.
   ‍
5. Pending Transactions
   ‍Some transactions may appear in your records but not in the bank statement because they have not been processed yet. Make sure to account for pending transactions when reconciling.
   ‍
6. Reconciliation Cancellations
   ‍When you cancel a reconciliation, all associated transactions become available again. Make sure to reselect these transactions in the new reconciliation.
   ‍
7. Not Saving Changes Before Exiting
   ‍It's essential to remember to save your progress if you decide to pause and continue later. If you exit without saving, you could lose your changes.
   ‍
8. Errors in Editing a Reconciliation
   ‍When editing a reconciliation, you might make a mistake that affects the final balance. Be sure to carefully review your changes before saving.
   ‍

Remember that while these issues are common, they can easily be avoided with a little care and attention to detail. If you continue to encounter problems, consider seeking professional advice.