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.
Related Links
You May Also Like
-
In automated clearing, Bank statement details are automatically matched and reconciled with system transactions. Learn how this process works and what are the perquisites to enable the same.
-
How the inflow and outflow of cash is linked to the operating cycles of the business? Learn the cash management process in an enterprize and it's key components.
-
Bank Reconciliation is a PROCESS to Validate the bank balance in the general ledger With Bank Statement. Learn the bank recon process.
-
Introduction to Bank Reconciliation Process
These set of articles provide a brief introduction to Bank Reconciliation Process. This topic not only discusses the meaning of bank reconciliation process but also discusses how this process in handled in new age ERPs and Automated Reconciliation Systems.
-
The topic for this lesson is "Introduction to Cash Management Process". We start with the learning objectives for building requisite functional expertise in cash management process.
-
Although there is no straight forward answer to the question, how to best organize a treasury function, this article provides an generic view of the way large MNCs creates departments or sub-functions within the treasury function.
-
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!
-
Introduction to Cash Clearing Process
Unravel the mystery behind clearing accounts. Learn why clearing accounts are used in finance and accounting. Learn why so many clearing accounts are defined in ERPs and Automated Accounting Systems.
-
So many codes in the lines that are there in a Bank Statement. It contain lots and lots of meaningful information that can help automated many tasks. Explore more!
-
Cash Clearing – Accounting Entries
The Cash Clearing process enables you to track amounts that have actually cleared your bank. Learn the steps and accounting entries that gets generated during the cash clearing process.
