The reconciliation of any accounting account is the adjustment of your account balance with respect to your actual balance . The purpose of the reconciliations is to guarantee the integrity of the accounting information of the different accounting items: accounts payable, accounts receivable and treasury accounts.
Bank reconciliation is an internal and routine process, which consists in verifying at the closing date that the balance according to the accounting books of the company is coincident with the balance of the bank statement. In the case of audited companies , in addition to the statement, a confirmation of the balance by the financial institution will be necessary.
It is relatively frequent that, at the end of the month, the balance of the bank accounts does not coincide with the balance in the accounting accounts , so it is necessary to keep track of those differences and analyze the reason for those mismatches.
Manual Reconciliation vs Automatic Reconciliation
The way we do the reconciliation of the accounts will depend on different factors: size of the company, software used, training and experience of the accountants, etc.
In an SME , in which a single person can perform the entire accounting process with an accounting program, this can be done manually on the extracts, something clearly unfeasible in a large company where they can participate in the process, multiple people, in many cases located even in different work centers.
For automatic reconciliation, Sage XRT Treasury allows automatic communication with banking entities, so that the system will proactively import the bank statement and integrate it into the application by automating the reconciliation of rule 43 with the accounting movements.
On the other hand, Sage Offices Connected allows to manage the systematic process of comparison between the annotations that appear in the bank statement with the accounting entries of the current account, allowing to load the bank statement of the files downloaded from the bank according to the CSB43 standard and to carry out conciliations both Manuals as automatic.
Differences that can occur in Reconciliations
In the reconciliations we can find two types of differences:
Temporary : they are due to notes not recorded by temporary differences between the bank statement and the accounting .
Permanent : refer to errors or omissions of both the bank and the company, or items that are unknown as accounting . To match the bank statements with the accounting, you can temporarily use account 555 of pending items of application, which the General Accounting Plan defines as remittances of funds received whose cause is not, in principle, identifiable and provided they do not correspond to operations that by their nature should be included in other subgroups. Such remittances will remain registered in this account for the time strictly necessary to clarify their cause.
AHW