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Overview
Is Easy Business App, the process of "bank reconciliation" is checking that every transaction on the bank statement has been correctly processed and accounted for.
Often, this process is completed on a monthly basis, to ensure accurate bookkeeping records throughout the year.
Reconciliation works in a slightly different way in Easy Business App compared to other systems (see the FAQ at the bottom for more info if you're a bookkeeper or advisor new to Easy Business App and you're curious why we built it this way!)
The reconciliation screen is split into two distinct sections "For Business Owners" and "For Advisors". This reflects the tasks that may generally done by business owners vs. their advisors, but in your business it may be your bookkeeper who does all your transaction processing.
The reconciliation date will default to the last day of the previous month, but this can be changed in the top-right of the screen.
Note that manual bank accounts do not show for now, only those accounts linked with bank feeds. We'll review this in future with a view to adding support for manual account reconciliation.
Reconciling an Account - Business Owner Section
There are two numbers in this section:
- Bank Transactions Unprocessed: this is the total of all the transactions for this account still in "To Do" in the Bank Transactions screen. These transactions have not yet been accounted for in your books and should be categorised/matched. You can click on the number to drill-down to the Bank Transactions screen to see these transactions.
- Unmatched Ins & Outs: this is the total of all the unmatched Ins and Outs (i.e. manual Expense and Income) documents where the Paid From/To is the selected bank account which have not been matched yet to an item on the bank statement. You can click this number too to drill-down and see them.
Once all these transactions have been processed, this section is complete!
Reconciling an Account - Advisor Section
This section includes items that impact the Reported Balance for this account (including things like Opening Balance Journals) and shows the calculation for arriving at the Reported Balance.
Similar to the Business Owners section, some figures can be clicked on to drill-down. Again, the goal is to reduce these numbers to zero to ensure everything has been processed.
A good first task is to review any transactions marked as "I'm Not Sure" by the business owner, as accounting entries have not yet been generated for these:
The next section contains the Reporting Balance calculation, which is the balance as of the selected date you will see in a Balance Sheet report. This equation is:
- Opening Balance Journals for this account, plus
- Categorised/Matched Bank Transactions (i.e. everything that has been processed from the bank feed), plus
- Unmatched Ins/Outs (this is the same figure as in the Business Owners section), plus
- Unreconcilable Ins/Outs* (manual expense/Income items that were created with a date before the earliest available bank feed item and which cannot therefore be matched with a bank transaction as none is available) plus
- Manually Reconciled Ins/Out* (unreconcilable ins/outs that have been manually flagged as reconciled from the Ins/Outs screen)
*you will only see Unreconcilable Ins/Outs and Manually Reconciled Ins/Outs where transactions exist in that state, otherwise these rows will be hidden.
When the Reporting Balance matches the Actual Balance, everything reconciles correctly.
Manually Entering the Actual Balance
While the balance as reported by the bank feed is generally correct, there are unfortunately situations where it is not. Some bank providers are more affected by this than others. You can therefore manually enter the actual balance as confirmed on the bank statement by clicking the Edit button.
- When the Actual Balance figure is orange the figure being used is the balance reported from the bank feed integration. You should always double check this to guarantee an accurate reconciliation.
- When the Actual Balance figure is green the figure has been manually entered and confirmed.
We would recommend that you always enter the figure from the bank account manually as a good double-check to confirm everything is as it should be. It's also a good visual indication that you have completed reconciliation for this month:
Fixing Common Reconciliation Issues
Sometimes, even when all transactions have been processed, there are no "Not Sure" transactions and the actual bank balance has been confirmed, the account will still not reconcile. The difference is reported underneath the Actual Balance:
There are a few common reasons for this:
- The Opening Balance journal for this account may be incorrect. You can fix this by creating/edit the Opening Balance Journal for the account. Learn more here about how to Create Opening Balance Journals.
- There is a "gap" of missing transactions between the Opening Balance journal and the first bank transaction. For example, the Opening Balance journal was entered dated 01/07/2023, but the first item from the bank feed is dated 15/08/2023. The transactions between 01/07/2023 and 15/08/2023 are missing. This can be fixed by either:
- Adding the missing transactions by uploading a CSV from the Bank Transactions screen, or
- Updating the opening balance journal to 14/08/2023 and entering the correct balance as of that date.
- A manual in/out (Expense or Income item) has been created against the wrong account (incorrect Paid From/To) or keyed with an incorrect amount (a typo). Check any other accounts in the Ins/Outs screen to find this, or run a General Ledger detail report to hunt down the incorrectly recorded transactions.
Frequently Asked Questions about Reconciliation
Q: This process is a bit different from other accounting software. Why?
A: We worked with bookkeepers and accountants and spent a lot of time designing this process to be as transparent as possible whilst being supportive of the actual workflow of reconciliation. Once you've done it a few times, we think it'll become second nature and allow you to reconcile your accounts in double-quick time.
Q: What's the simplest way to understand this? There's a lot of numbers on this screen!
A: The simplest approach is to click on all the numbers that can be clicked on and process the documents to make those zero, then enter the Actual Balance from the bank account and there's no difference, you're finished! If there is a difference, see the section about on Fixing Common Reconciliation Issues or reach out to our support team if you simply cannot find the reason the balance won't reconcile.
Q: As a business owner, can I reconcile my own accounts?
A: You can. But if you work with a bookkeeper you probably want to let them do it. Reconciliation is incredibly important to ensure every cent is accounted for and you don't get any nasty surprises at tax time. For a very simple business with few transactions, you may be able to handle it yourself. But for more complex businesses, best to leave it to your bookkeeper :)
Q: Why do I see "Actual Balance Not Available"?
A: If you're in a Demo Company, this is dummy data and there is no actual balance. If you're seeing this in a real organisation, there may be an issue with the bank feed. We monitor proactively for these errors, but if it hasn't fixed itself in 48 hours, please contact our support team and we'll investigate.
Q: Why can I only select the last day of a month?
A: In practice, we found this is when 99% of bookkeepers actually reconcile accounts. If you need to reconcile on different dates, upvote (and comment with your use case) on this feature on our feature request board!
Q: A previous month did reconcile, but now it doesn't? What gives?
A: An old transaction has almost certainly been added into a previous month. Check for "Unmatched Ins/Outs". Another alternative would be a change to the Opening Balance, so that's also worth double-checking.