Learn how to perform a bank reconciliation. This article will cover:
- Importing Your Bank / Credit Card Transactions
- Reconciling Imported Bank Statement Transactions
- Saving the Reconciliation
- Performing a Traditional Bank Reconciliation
- Bank Reconciliation Tips and Tricks
Why perform a reconciliation of your bank and credit card accounts? To verify that you’ve correctly accounted for all the money going in and out of them.
A bank reconciliation is the process of matching transactions in your bank statement (Imported Transactions) to those in your accounting software (entered transactions). Traditionally this was done using a physical bank statement you’d get in the mail once a month. Nowadays, a bank feed can be set up to import your bank transactions into your accounting software on a daily basis.
Importing Your Bank / Credit Card Transactions
So how do you import bank or credit card transactions? There are two options:
Option 1 - Bank Feed
The easiest option for importing bank transactions is by setting up a bank feed. This is where Kashoo talks to your bank on a daily basis behind the scenes, bringing in the latest transactions from your bank.
Option 2 - File Upload
You’re also able to upload a file. If you have a lot of historical bank transactions to import, you may need to upload a file as the maximum amount of data a bank feed can usually import is 30 to 90 days.
We recommend uploading an OFX (Microsoft Money), QBO (QuickBooks), or QFX (Quicken) file downloaded from your online banking.
Some banks may not provide the file formats listed above. If this is the case for you, then Kashoo can also import CSV, Excel, or QIF files.
Note: If you're unable to import bank transactions, you can still perform a reconciliation. Please scroll down to the section on Performing a Traditional Bank Reconciliation to learn how.
Reconciling Imported Bank Statement Transactions
Once you've either set up a bank feed or uploaded your bank transactions, this is how you perform a reconciliation.
Assuming that your bank statement transactions are imported:
1. Go to the Banking page.
2. Select the Account you want to reconcile and the Statement Date, which is the date that you want to reconcile your books up until. If you have many months of transactions to reconcile, we recommend only reconciling one month at a time.
By selecting the Account and Statement Date you'll see your transactions appear below.
The transactions are divided into two sections:
- The top section contains transactions found in your bank statement. These contain Imported Transactions
- The bottom section contains transactions entered into Kashoo. These contain Transactions Entered in Kashoo.
Your goal is to use the Imported Transactions in the top to either create new transactions, or match them to Transactions Entered in Kashoo.
Accepting a Match
If there’s a potential match between the Imported Transactions and theTransactions Entered in Kashoo, you’ll see a suggested match. To accept the match, you simply check off the box.
If there’s no match found you’ll have the chance to add or remove a transaction.
Adding an Expense
By clicking on Add Expense, you'll be able to fill out the Supplier, and Account fields and add the transaction. If you have Sales Tax, Memo or Project to add, you can do that if you like, but it's not necessary to choose those fields.
By clicking on Add Income, you'll be able to fill out the Customer, Account fields and add the transaction. If you have Sales Tax, Memo or Project to add, you can do that if you like, but it's not necessary to choose those fields.
Adding a Transfer
By clicking on Add Transfer, you only need to choose the Destination Account to transfer the funds with. You do have the option to add a Description and Currency , but it's not necessary.
Removing a Transaction
If you ever happen to end up with a duplicate transaction in your list of Imported Transactions, removing it is as simple as clicking on the Remove from Bank Statement checkbox.
Saving the Reconciliation
When all your bank statement transactions are matched to your entered transactions, you're ready to save the reconciliation. To do so, scroll down to the bottom of the page and click on Add Statement
You will immediately get taken to the Statement you just created. To get back to your list of Saved Statements scroll to the bottom and hit Back
Performing a Traditional Bank Reconciliation
If you won't be importing bank statement transactions, you can still perform a bank reconciliation the traditional way. To do so:
1. Choose your Account and Statement Date.
2. Check off the boxes next to the entered transactions that match those found on your bank statement.
3.Once you've verified that the Closing Balance matches the one found in your bank statement, click on Add Statement.
Bank Reconciliation Tips and Tricks
We’ve finished going over the basics of performing a bank reconciliation. You may want to check out our article that provides an in-depth look into reconciliations, some tips and tricks, and teaches you how to troubleshoot common reconciliation problems: