A bank reconciliation is a simple process which is performed by a company to ensure that the transactions on their bank statement match the transactions entered onto their accounting software.
Traditionally the bank reconciliation was a monthly task, because it was associated with receiving the bank statement in the post, however as most businesses now bank online so have instant access to statement information there is more control over how frequently it is reconciled – it can be done daily or weekly rather than monthly to ensure the company accounts are as up to date as possible.
The benefits of reconciling the bank account regularly include:
- Accounting accuracy – checking your transactions against your bank statement ensures that you have entered everything accurately into your accounts
- Security – working through your bank statement helps to identify any transactions that may have gone through your bank that shouldn’t have
- Improving cash flow – good cash flow is essential for your business and reconciling your bank regularly will assist you in understanding the current balance of your bank and which transactions are yet to clear your account
The bank reconciliation can be done within your accounting software, outside of it in excel or on paper by just ticking through the transactions on the bank statement – generally this will depend on the number of transactions and your company procedures and preferences.
How do I do it?
The below explains how to use the reconciliation function within Sage 50 Accounts once all of the transactions off the bank statement have been posted.
- Open the bank module
- Select the bank account you would like to reconcile
- Click ‘Reconcile’
- On the ‘Statement Summary’ enter the reference you would like to use, the end balance on your bank statement, the statement date and any interest or charges in the period
- Click ‘OK’
- In the ‘Reconcile’ screen check that the last reconciled balance matches the opening balance on your bank statement
- Select all of the transactions in Sage 50 Accounts which appear on your bank statement and click ‘Match’ which will move them from the top box to the bottom box
- Once you have selected all of the items on your bank statement the difference shown at the bottom right should be zero – this is confirmation that you have selected all of the items which made up the difference between the opening and closing bank balances
- If for any reason there is a difference remaining you will need to revisit your postings before you complete the reconciliation – you can save the reconciliation and come back to it once you have made your corrections
- ‘Match’ any additional transactions so that the difference at the bottom right is zero
- Click ‘Reconcile’
Please feel free to get in touch by phone on 01782 940380 or by email at firstname.lastname@example.org if you would like any further advice or assistance with bank reconciliations.