Bank Account Reconciliation in Business Central - Streamline financial management.

Bank reconciliation in business central 365 is a process used to compare and tally the records of the business organisation and those of a bank to ensure that they are accurate and compatible. It confirms that the purchasing activities and transactions that were made are correct with the records found in the bank for the same period. This way, you will be able to see whether the financial records are missing or perhaps inaccurate in some way and sort out the corrections needed. Other probable sources of such errors can comprise of timing differences, errors in interpreting the transaction, data breaches, and banking charges, among others. 

A Gap-Detecting Periodic Process 

This process is done periodically and entails comparing the bank’s records for checks, withdrawals, deposits, and other payments with the company records to determine if all the records are aligned. On the same note, bank reconciliation also enables businesses to detect any gaps between the bank statements and the entries made, something that is crucial for companies when they are trying to audit the records or in case there are some official inquiries. It also helps companies adhere to all required financial information standards. This is especially useful for organisations that engage in cash-based transactions more often. 

Advantages of Bank Reconciliation 

Besides serving as a critical reconciliation with bank statements, this process gives several tactical benefits in the general management of finances. Here are some of the primary benefits of creating and maintaining a bank reconciliation statement: 

    • Streamlines Financial Processes 

    • Minimises Financial Risk 

    • Improves Cash Management 

    • Enhances Internal Controls 

    • Provides a Good Platform for Accounts Receivable and Accounts Payable 

    • Contributes to Financial Analysis 

    • Encourages Financial Accountability 

    • Aids in Business Growth 

Bank Reconciliation: Dynamics 365 Business Central Workbook 

The following steps will help you in smooth and efficient bank account reconciliation in Dynamics 365 Business Central: 

    1. Preparation for Bank Reconciliation 

Step 1.1: Retrieving Bank Account Reconciliation 

    • Sign into Business Central and with the help of the search bar type in “Bank Account Reconciliations.” 

Retrieving the bank account reconciliation process from Dynamics 365 Business Central to begin accurate financial reconciliation.

    • Choose the correct bank account to be reconciled. Make sure that the statement date and the balance as stated at the end of the banking statement are well provided. 

Step 1.2: Reviewing Un-posted Reconciliations 

    • The system will present all unreconciled bank accounts that are yet to be posted. Choose the correct one or make a new one from the reconciliation entry. 

Un-posted Bank Reconciliations Overview in Dynamics 365 Business Central Viewing un-posted bank reconciliations in Dynamics 365 Business Central for accurate record management.

    • Make certain that the accounts of all business transactions up to the statement date are included in the company’s ledger. 

Step 1.3: Input Statement Details 

    • The bank statement date and ending balance should be entered in accordance with the bank records. This will act as the foundation of a reconciliation process that will be undertaken to come up with a middle ground of agreeing to disagree. 

Inputting bank statement date and ending balance to start the reconciliation process.

2. Matching Bank Statement Lines with Ledger Entries 

   Step 2.1: Viewing Uncleared Transactions 

    • Check the uncleared transactions that appear on the Ledger Entries of the Bank Account. 

   Step 2.2 Popular Line Elements of a Bank Statement 

    • Enter all the lines on the bank statement at bank statement lines side, by keying them in by hand so that there is no room for error. 

Manually entering line elements from the bank statement to ensure accurate reconciliation.

Step 2.3: Matching Entries 

    • Automatic Matching: Back up the file to the original bank statement and use the match automatically button to match the lines with the corresponding ledger entries by using text, such as cheque numbers or descriptions. 

Matching bank statement lines with ledger entries using automatic and manual methods.

    • Manual Matching: In the case of unmatched entries, on both the Bank Statement Lines and Bank Account Ledger Entries sides, choose the matching lines by using point and click, then click on the Match button. 

Step 2.4: Reviewing Matches 

    • Check for the appropriate on the matched entries. If any entries are incorrectly matched, Select wrongly match entries then go to the “Matching” link and click remove match any entries and re- match them as needed. 

Reviewing matched entries to ensure accuracy before finalising the reconciliation.

3. Finalising and Posting the Reconciliation 

Step 3.1: Reviewing the Reconciliation

  • Finally, after doing the match for all entries, you will be able to cross-check the reconciliation summary for any missing figures or difference.  Cross-checking the reconciliation summary for any discrepancies before posting.

    • To create a preview report, use go to ‘Test Report’. Such information to be posted will be pointed out in this report and any that should be posted before it will also be highlighted. 

    • For any unmatched transaction at bank statements line side, you can select that transaction and use transfer to general journal option to post that transaction. 

Step 3.2: Posting the Reconciliation 

    • After you have grouped and inspected all the entries, go to the next step of posting the reconciliation through the “Post” button. 

    • Make sure the reconciliation is put in the ledger after the accounting period in which the figures relate to, to avoid inconsistent accounting records. 

Step 3.3: Archiving Reconciliation Records 

    • Finally, to ensure that records of the reconciliation process are accessible for future reference and to meet the company’s record retention policy, the posted reconciling items should be saved, and the reconciliation records should be stored 

    • properly. This also contributes to the fact that the records can be retrieved in the future for recall or for audits. 

4. Handling Discrepancies 

Step 4.1: Identifying Discrepancies 

    • In identifying and examining the differences in the balance between the bank statement and the ledger, find out what caused them. Possible reasons may range from timing differences in transactions preparation, mistakes in entering the transactions, general banking charges or other transactions that may not have been recorded. 

Step 4.2: Resolving Discrepancies 

    • If discrepancies have been identified, correct the ledger entries or entries made on the bank statement. 

    • Record the variances and steps taken to correct them in the reconciliation report. 

Step 4.3: Reporting Unresolved Discrepancies 

    • In case there are some outstanding variations unsolved, approach the Financial Manager for further examination. Be sure to include detailed notes regarding the difference and the attempts to rectify it in one’s records. 

5. Reversing a Posted Reconciliation 

Step 5.1: Reaching the Bank Account 

    • To delete a bank reconciliation that has been posted, work with the bank account statements in Business Central. 

    • To access the statement, follow the path related-tab-statement. 

Step 5.2: Reversing the Reconciliation 

    • Go to the specific reconciliation that needs to be reversed, get its statement ID, right click on it, and choose the undo option. 

    • This action will post an unposted recon, thus enabling correcting or adjusting the amounts recorded for the account. 

Reversing a posted bank reconciliation to correct or adjust amounts recorded.

How to Undo a Bank Reconciliation 

The previous version of bank reconciliation in Dynamics Business Central did not have an option of allowing a user to reverse a bank reconciliation. This can be done by opening the Bank Account related to the job, then going to the Related tab, and then to Statements. Place the mouse on the statement ID you want to restore, and right-click then click Undo. This will clear and reproduce the statement to a new Bank Account Reconciliation that has not been posted yet. 

Emerging Developments of AI in Bank Reconciliation 

Advanced Predictive Analytics: 

As noted by industry experts, while many companies still operate with decentralised data and analytics structures, a growing number are transitioning to centralised organisational models that leverage AI. In the realm of bank reconciliation, AI’s role is evolving towards advanced predictive analytics. This technology not only identifies current discrepancies in financial systems but also forecasts potential future issues based on historical data. By predicting these problems before they manifest, AI enables banks to address and resolve issues proactively, thereby mitigating negative impacts on financial accuracy and operations. 

Integration with Blockchain: 

Blockchain technology is poised to revolutionise financial processes, including bank reconciliation. By providing a single, immutable source of transaction data, blockchain ensures the accuracy and integrity of financial records. When combined with AI, which analyses blockchain data in real-time, this integration enhances the reconciliation process. AI can detect anomalies and irregularities within the blockchain records, improving transparency and security. This fusion of technologies is set to significantly advance the efficiency and reliability of financial transactions. 

Real-Time Reconciliation: 

The trend towards real-time reconciliation technology is transforming various industries. This technology allows for continuous monitoring and reconciliation of financial transactions as they occur. Real-time AI systems enable institutions to maintain up-to-date and accurate financial records, facilitating immediate adjustments and better cash flow management. By integrating real-time reconciliation, banks and financial organizations gain the ability to make informed decisions promptly, enhancing overall operational efficiency and financial oversight. 

Conclusion

In conclusion, one should note that bank reconciliation is an important process that must be performed to guarantee that all the records of the enterprise are correct. Thus, understanding the flow and the utilisation of automated tools to accomplish this task, various companies can conduct bank reconciliation in a smooth and error-free manner in the necessary timeframe as per the business needs. 

In addition, bank reconciliation software like Business Central 365 may provide extra and mutual benefits that would include the abilities of linking it with other data sources, streaming, changing, and combining different types of files and spreading all possible company’s reconciliation prospects.