Introduction 

Periodically, you need to reconcile the system’s view of the status of your Bank Accounts 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

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 Statement of Account from your Bank. 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 one lodgement record on your statement.
• Electronically: If your bank provides electronic bank statements via online banking in a 'data file' format (e.g.: QIF), you can use the Automatic Bank Reconciliation facility. With this you upload the electronic file from the bank and the system 'automatically' reconcile it to your system bank using 'matching' rules. See Generating Bank Statement Files and‍ Automating Bank Reconciliation.‍ 

Where the system cannot 'match' transactions exactly it will suggest possible matches. If no match is found, you can post the transaction directly to the relevant Customer (receipt) or Supplier (payment) or record a Sundry Receipt/Payment.

Supplementing the Reconciliation process

You can also supplement this process by uploading interim (such as daily, bi-weekly, or weekly) electronically produced Bank Import Files. You can also print off interim statements from your online Bank login and use them for matching. However, it is still important to perform a full Bank Reconciliation process, especially regarding, and in advance of, the production of Management Accounts.
 

The reconciliation process matches many of the transactions from the imported electronic statement with the System’s Bank Accounts. This results in a significant reduction in the workload involved with the full Bank Reconciliation. It also facilitates immediate response to any discrepancies (such as refused Receipts, or Shortfalls) much closer to the point in time at which they arise. 

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

Prerequisite

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 Statement.
   
   
2. Delete

   Info: Our New Look

   If you are using our new look navigation, Import Bank Transactions can be found in the Bank tab in the new sidebar:

   
   

3. If you receive a warning message, click Clear Imported Transactions to proceed with the Bank Reconciliation.

Begin a Bank Reconciliation

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

1. Go to Bank > Bank List and find your account. 
2. Under Actions, select Create New Reconciliation.
   
   
   
3. Delete

   Info: Our New Look

   If you are using our new look navigation, Bank Reconciliation can be found in the Bank tab in the new sidebar:

   

   
   

4. If the Bank Account has a current open un-reconciled Bank Reconciliation episode, you will be warned. Resolve and close open reconciliations by going to Reconcile Now > Current Reconciliation.
    
5. Complete the following fields:
   • Bank: The GL of the Bank account that you are reconciling is appearing here. If you want to reconcile another bank account, select different GL account.
     
   • 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.

• 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.
  
  

• Note the following features:

  • View Transactions: The View Transactions button should be used if you want to update the list of transactions to be reconciled. In case when the date of your reconciliation has been changed you need to click on this button to update the list.

  • Balance: The System's (GL account) Balance will be displayed here as of date to which you reconcile your bank statement. This is a display only field and cannot be changed by the user. If it doesn’t match the amount of the Closing field as of the same date, then you need a transaction-by-transaction Reconciliation. If these two figures do match, click Match All > Reconcile > Close which will then complete the reconciliation for that Bank Account.

  • Unreconciled Receipts: 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. This is calculated by the system and cannot be edited.

  • Unreconciled Payments: 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. This is calculated by the system and cannot be edited.
  • Record Notes: Use if you need to record a note against the Bank Reconciliation. The list of all notes against a Bank Reconciliation can be found in the Bank List by going to Reconcile Now > All Reconciliations.
  • Match All: Use this to select or deselect transactions from one or multiple pages. 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.
    
  • Click Tran. Type to sort the transaction list by ascending sequence of Transaction Type. Click it again to sort in descending sequence. 
  • Filter: Enter a Value (or a partial Value) in the filter fields to filter the transaction list.
  • Docs: You can also add Documents (one or more) to a Bank Reconciliation. If you have been using the Bank Import facility, a copy of the imported file is automatically added to the Document Manager for each import.
  • Print Reconciliation Report: The Print Reconciliation Report will give you the option to view/ print the report which shows the list of Reconciled and Un-reconciled transactions for that Bank Reconciliation. 

Matching Transactions and Resolving Imbalances

In the Bank Reconciliation window, under System Details, note the following:

• Unreconciled Reconciliations the sum of all the System’s unreconciled receipts
• Unreconciled Payments: This is up to and including the To date. 
• Difference: This is the total un-reconciled movement (receipts & payments) yet to be reconciled for this Bank reconciliation. The reconciliation would be completed once this amount is zero.

As you tick off various transactions during reconciliation, you will see that these reduce. 

To proceed with the transaction-by-transaction Reconciliation:

1. Click View Transactions.

2. If you have been using the Bank Import facility and/or if you have been updating your Bank Account by regularly matching off transactions either daily or weekly, then many of the transactions will display as matched. To view the remaining unmatched transactions, under the Matched column select Un-Matched.

3. Go through your printed Bank Statement and under the Matched column, tick the transactions that match.

Resolving Imbalances

When you have completed the process, you may have an imbalance 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..

In the example here, there was a Bank Credit for £5.00 on the physical Statement that didn’t appear in the System. 

1. To enter a Bank Charge Refund from this window, click Create Transactions. This option lets you create transactions that are missing from your Bank GL Account. It provides a list of transactions that can be entered (Bank Debit/Credit Journal, Sundry Bank Payments/ Receipts, Bank Transfer, Record Supplier Payments, or Customer Receipts).

3. In this case, to adjust for this difference, click Bank Debit Journal and enter the Bank Charge Refund against the relevant Bank Charges GL Code.

4. Click Process. The system will return you to the Bank Reconciliation function.
5. In this example, there is also a Deposit in the System transactions which is not on the Bank Statement. The actual Deposit in the Bank was made to a different Bank Account in the Bank Branch which now needs to be rectified.

6. In this case, the actual physical Bank Deposit was made to the correct Bank Account, and it is the System that is in error. To correct this issue, click Create Transactions > Bank Transfer to make a System Bank Transfer.

7. When you have accounted for all discrepancies, click Reconcile, then Close. Once the statement is reconciled it cannot be edited again.

Uncleared Checks and Mismatched Deposits

Uncleared Checks

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

In the Bank Reconciliation window, 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 and then Close. 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. 
 

Where these are in a System Lodgment, in the Bank Reconciliation window, you can click the + plus symbol next to it. 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.
 

Banked and In Progress Deposits

You can have several Lodgments in preparation prior to a Bank Reconciliation. Some of these will be Banked and some will be In-Progress. 
 

The system assumes that all Lodgments have been banked and therefore includes them in the system’s view of the Bank Balance and Transaction list. 

As with un-cleared Checks, if you leave any In-Progress Lodgments un-ticked 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.

Reverse Transactions

If a System Transaction differs from the Bank Statement and you believe the Bank Statement is more correct, then you can amend the system transaction in several ways. All will correct the transaction, not only in the Bank Account but also in the associated Customer or Vendor Receivables or Payables Account. 
 

You cannot delete Transactions in your system’s Bank Account, but you can Reverse them:

1. In the blue banner, go to Bank > Bank Reconciliation. Alternatively, go to Bank > Bank List > View Transactions against the appropriate Bank Account.

2. Find the transaction and click Int. No. to open the Transaction Details window.

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's (Vendor’s) Account. 

See:

‍ Amend, Cancel or Delete Transactions‍

Unreconcile a Bank Reconciliation

If you decide to Un-Reconcile a much earlier Reconciliation, such as several previous generations, then you should Un-Reconcile all subsequent Reconciliations. Amendments you make to the first one 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. Untick Reconc. You will be asked to confirm that you will proceed with the un-reconciliation.

4. You should then, as soon as possible, Re-Reconcile all the Reconciliations that you have re-opened in their correct sequence.