The Ledger Lowdown: Breaking Bank Reconciliation
Hey blog readers! A pain point with a lot of our customers with the optional module, Cash Management, is the dreaded bank reconciliation...dunh DUNH DUNH. This is an easy process when you balance 
, but can be a huge headache when you don't. For those of you who are new to FE or Cash Management, the process compares the General Ledger cash account, bank register, and your bank's monthly statement to ensure they all have the same balance.
Balancing your bank register to your bank's monthly statement and GL cash account can get challenging and sometimes complicated especially if multiple modules use the same bank. Here are some common causes of reconciliation issues:
- Checks were created in a fiscal period other than the one in which they were voided
- Transactions are marked as Do Not Post or have not yet been posted
- Manual journal entries were made to the cash account and not posted or imported to Bank Accounts as an adjustment
- Bank adjustments were not created when the journal entry batch was posted to the cash account, so a manual bank adjustment was entered as Do Not Post
- The debit account on the adjustment is not the cash account
- The bank is not set to track cash in General Ledger
If your bank register and bank statement don't balance to your GL cash account the first time, try the following to find the cause:
- Ensure the bank is set to track cash (BB103818) in General Ledger.
On the Bank tab, verify the account numbers used for Accounts Payable and Cash Management are correct.
- Post to General Ledger.
Post any unposted transactions that show in the bank account but not the GL cash account. Also, make sure all journal entries to the GL cash account are posted.
- Note timing issues.
If you voided checks in a month other than the one in which they were created, the bank account and cash account will remain out of balance until the reversals post to the cash account. If you must correct this in the current period, you can create an automatically reversing journal entry (BB22411) to your GL cash account.
- Determine how you will treat Do Not Post transactions.
Run a transaction register or transaction list to find transactions marked as Do Not Post. The account will remain out of balance until the transactions are posted, or manual journal entries are posted to balance to the bank register.
- Check the debit account used on adjustments.
An account, other than the cash account, used as the debit account on an adjustment will cause the bank account and GL cash account to be out balance. If the adjustment is unposted, edit the debit account. If the adjustment is posted, enter another adjustment to correct the original adjustment (BB66590).
Do you have any other tips and tricks for fellow bank reconcilers? Let us and others know by leaving a comment.
Talk to you later!