Complete Bank Reconciliation Process

Bank Reconciliation Process is a eight step process starting from uploading the Bank Statement to finally posting the entries in General Ledger. Learn the Eight Steps in Detail!

Bank Reconciliation Process

Step 1 is to Upload the Bank Statement

Modern cash management systems provide for matching transactions from bank statements both automatically as well as manually.

The bank statement can be either uploaded manually or in an automated way if available in the desired electronic formats. The bank statements entered are per bank account number and are identifiable by a unique number and statement date provided by the user.

In the header data, Bank statement opening balances and closing balances are provided before creating the bank statement that acts as a control check to ensure all transactions have been uploaded properly.

For the process of automatic bank reconciliation, generally the system requires electronic bank statement in a pre-defined format only.

Step 2 is to Reconcile with Bank Statement using Automated Clearing

Where Bank statement details are automatically matched and reconciled with system transactions.

This method is ideally suited for bank accounts that have a high volume of transactions.

Step 3 is the Manual Clearing

You use the manual reconciliation method to reconcile any bank statement details that could not be reconciled automatically.

Step 4 is to Review & Summarize

Once the reconciliation process, is complete a review of reconciliation results must be carried out. Generate various reports to support this process of review.

Step 5 is to generate Unreconciled Report

Generate a report with list of all un-reconciled entries, for further decision making and matching.

Step 6 is to Match Unreconciled Entries

Unmatched entries as reported by unreconciled report are to be investigated and matched manually. Open items in clearing account will be cleared to respective customer / vendor account after getting information from bank/ other sources.

The entries that still remain unmatched should to be manually transferred to "Unreconciled Account".

Step 7 is to Transfer to General Ledger

After the reconciliation process, the accounting entries generated will be passed to the general ledger. The receipt and payment entries will be transferred in to the actual Cash/Bank account in the General Ledger when posted.

Step 8 is to Post Entries in General Ledger

Once transferred to General Ledger, the next step is to makes the postings to the bank account, bank clearing account along with the payment clearing. The posting can be done for each journal or for the batch.