Principles of bank reconciliation and configurations

Introduction

What is bank reconciliation?

Bank reconciliation is a check carried out by the accounting/finance department to ensure that the transactions on bank statements match the accounting entries (“moves” in AOS) in the associated bank account as closely as possible.

Bank reconciliation involves matching (cross-referencing) the transactions recorded in the company's accounts with those of the bank in order to identify any isolated entries.

Bank reconciliation allows you to detect:

• Omissions

• Overdrafts, bank charges, and commissions that appear directly on the statement

• Accounting errors;

• Discrepancies between certain transactions known to the institution first and recorded by the bank later, or vice versa (a transaction may also appear on the bank statement the following month).

• The bank reconciliation statement will justify any differences in balances.

Global accounting approach

• Customer accounting: invoicing and incoming payment methods require meticulous work to identify incoming transactions directly on the statement.

With AOS, it is possible to simplify the work as much as possible

With enhanced statements that contain the issuer's bank details → Immediate identification of the partner (third party) and search for invoices.

Defining search rules based on the partner’s name, although less precise, often allows you to identify the third party.

• Supplier accounting: here, you can check entries, for example on checks or transfers issued, or potentially on direct debits made.

• General accounting: management focused on bank charges or other recurring costs with rule management and automatic entry integration to facilitate day-to-day work.

Reconciliation / Bank accounting

• Bank reconciliation: bank reconciliation allows you to associate (match) an accounting entry (move) for a payment with a line on a statement.

1. This applies to orders issued from the ERP (supplier or cash transfers, direct debits, LCRs, etc.).

2. This applies to payments received and entered directly from the ERP.

• Bank accounting: bank accounting allows you to generate a cash receipt / disbursement accounting entry from a statement line (in the case of customer transfers received, bank charges, etc.).

Queries for checking and accounting

Queries are used in conjunction with the system for reconciliation and accounting (select Partner, Invoice, Description contains, etc.), retrieval of Partners or Move Lines, and can be configured via the menu entry:

Access: Accounting → Configuration → Bank statement/Reconciliation → Bank statement queries

Rules allow you to perform value matching tests or retrieve a value via Code using Groovy code (and also allow you to retrieve half-interval parameters, for example).

Example:

• Description containing a label;

• Debit amount in the confidence half-interval;

• If the bank account details are identical to the partner's bank account details.

Configuring rules related to statements (accounting)

Access: Accounting → Configuration → Bank statement/Reconciliation → Bank statement rules

Accounting rules allow you to define search rules to automatically generate the accounting configuration:

1. Accounting configuration: select the accounting configuration associated with a bank account by payment method.

2. Query + Label: select the query that will be used to test the match with an item on the statement + the label searched for (for example, ENC_VIR). With the label, the system will automatically generate an accounting entry in the journal.

3. Partner fetch method: select a third party retrieval method:

• None: no partner is selected..

• Select: select a partner from the partner database.

• With formula: choose a Groovy formula to select a partner.

-From accounting entry

4. Counterpart account: select a counterparty account for the account that is associated with the payment method.

5. Specific tax: define a specific tax, if a tax must be applied.

6. Lettering to invoice: if this option is checked, select a query that will retrieve an entry line.

Configuring matching rules

Matching rules (Auto-reconciliation query) allow you to define rules for checking for matches by execution order and to define a color code between statement lines and accounting entries on the account associated with the bank account details.

Color codes:

• Green circle indicates that the rule is very precise, which translates into confidence in the reconciliation. For example, if the amounts and payment methods are the same and the dates are correct, the indicator is green.

• Orange square indicates a degree of certainty that is not 100%;

• Red triangle indicates high uncertainty.

Here is the list of preconfigured rules in order:

1. Origin and amount are the same: green indicator.

2. Amount, payment method, and date are the same: green indicator.

3. Amounts are the same and dates are identical: green indicator.

4. Amount and payment method are the same and dates are within the ranges (Date +/- Half confidence interval): green indicator.

5. Amounts are the same and dates are within the ranges (Date +/- Half confidence interval) (Orange C.): orange indicator.

6. Amounts are the same (Orange C.): orange indicator.

7. Amount and date within the specified intervals: red indicator.

Company settings - Bank payments

Access: Application config → Users/Company → on a company file, click on the “Bank payment config” button → Bank payment configuration window will open

Bank statement: the Bank statement panel contains two checkboxes that enable the Automatic pointing and Automatic accounting functions when the bank statement is loaded (Load statement button) for bank reconciliation operations. Otherwise, buttons on the bank reconciliation will allow you to run these processes individually.

Amount of the semi-interval of confidence for the amount / Duration (days) of the semi-interval of confidence for the dates: the two parameters Amount and duration of the half-interval are parameters that are used in automatic matching in order to facilitate reconciliation (proposals with confidence interval). These values are taken into account in automatic reconciliation requests containing “Amount within ranges” (Amount + or - 1 unit) or “Date within ranges” (Statement date + or - 2 days) in their name.

Bank statement lines template/Bank reconciliation statement template: finally, the printouts allow you to override the printout if necessary to output a statement of lines and the bank reconciliation statement (two printouts accessible via the buttons on the respective objects).