Bank reconciliation in Skyline Nexus ERP

Bank reconciliation in a system, in brief

Bank reconciliation in an ERP is the process of importing the bank statement, matching each statement line to a payment or receipt already recorded in the books, and explaining or posting whatever is left, until the reconciled book balance equals the statement balance. It matters because cash is the balance most exposed to error and fraud, and a system that does the matching leaves people to investigate exceptions instead of ticking lines.

This guide is the practical companion to our guide on bank reconciliation step by step, which teaches the method with a full paper example. Here the focus is the workflow in Skyline Nexus ERP: where bank accounts live, how a reconciliation is started, imported, matched and finished, which items need a ledger entry, and how to review the result.

Where bank accounts live: Treasury and the chart of accounts

Banking in Skyline Nexus ERP sits in the Treasury module, under the divider Treasury Governance and Control Centre. Treasury covers Receipts, Payment Vouchers, Salary Vouchers, Credit Notes, Cheques (Received Cheques, Issued Cheques, PDC Management and Cheque Books), Transfers, Petty Cash, Cash Advances, Expense Claims, Bank Accounts, Bank Reconciliation, Smart Import, Payment Processing and Approvals, with reports such as Daily Cash Position, Bank Balance Summary and Reconciliation Report.

Each Treasury bank account is synced into the chart of accounts through Fiscal Authority, Settings, Bank Account Sync, which links it to a ledger bank account. The trial balance warns when a Treasury bank has not been synced. Check that warning first: a reconciliation against a bank that is not linked to its ledger account proves the Treasury record, not the balance sheet.

Before you start: the preparation that saves time

Most of the effort in a reconciliation is caused by transactions that should have been recorded before it started. Recording them first turns the reconciliation into a short list of genuine timing differences.

• All customer receipts and supplier payments for the period recorded and posted
• Cheques issued and received entered in the cheque registers, with post-dated cheques in PDC Management
• Transfers between the company's own accounts entered as Transfers, both legs
• Card and payment-gateway settlements recorded, including their fees
• The bank statement for the period downloaded as CSV, TXT, XLSX or XLS
• Last month's reconciliation reviewed and its outstanding items listed

Starting a reconciliation

Go to Treasury, Bank Reconciliation, New Reconciliation. The Start Reconciliation form asks you to Select Account, set the From Date and To Date, the Statement Date, a Statement Reference such as the statement number, and the Statement Ending Balance exactly as printed on the statement, with optional Notes. A side panel shows the Book Balance and the Last Reconciliation for the account, which tells you immediately how far apart the books and the bank are and where the previous reconciliation ended.

Always start from the date after the last reconciliation. A gap between reconciliations leaves transactions that were never matched, and an overlap matches the same transaction twice. The on-screen How to Reconcile guidance follows the same order: select the account and dates, enter the statement ending balance, match and mark items reconciled, then add adjustments to reach zero variance.

Importing the statement and auto-matching

Rather than keying statement lines, import the file. The Import screen accepts CSV, TXT, XLSX and XLS files of up to 10 MB, and the Auto Match screen pairs statement lines with book entries. Matching on amount and date clears the bulk of routine receipts and payments. The remaining tools handle the awkward cases: detecting duplicates when a statement was imported twice or a payment was entered twice, merging items when one bank line covers several book entries, bulk update or void of items, and a check for new transactions entered in the books after the reconciliation was started.

Review auto-matches before accepting them. Two payments of the same amount on the same day to different suppliers can be paired the wrong way round, which does not change the balance but misleads anyone who later relies on the match.

Working the unmatched items

What is left after matching falls into three groups, and each is handled differently. Items in the books but not yet on the statement, such as deposits in transit and unpresented cheques, are marked outstanding: they are timing differences and will clear on a later statement. Items on the statement but not in the books, such as bank charges, interest and direct debits, are real transactions the business has not yet recorded. Items that appear on both sides with different amounts are errors on one side.

Match items one by one with the toggle, mark outstanding items, and update the statement balance or recalculate the book balance as items are resolved. When the difference is zero, the reconciliation is complete and can be printed for the file.

Reconciliation adjustments and ledger entries

The reconciliation screen lets you add and delete adjustment lines, which explain differences within the reconciliation. Treat them as exactly that: a record that the difference is understood. The ledger itself is updated through the normal routes, so that the bank account in the trial balance carries the corrected figure. Bank charges and card fees are recorded as expenses or a payment voucher, interest received through a receipt or a journal entry, and a customer's direct transfer as a customer payment against the invoice it settles.

Recording these items properly matters beyond the bank. A customer transfer entered as a generic adjustment leaves the invoice open in the AR Aging Report; entered as a payment, it clears the invoice and the customer's statement. A fee recorded as an expense in the right category lands in the right place in the Income Statement.

Worked example: a month-end reconciliation

A French wholesaler reconciles its main euro account for April. The Statement Ending Balance is EUR 48,250 and the Book Balance shown in the side panel is EUR 46,910. After import and auto-match, five items remain: a customer receipt of 2,050 banked on 30 April and credited by the bank on 2 May; supplier cheque 318 for 3,600 not yet presented; bank charges of 45; a card-acquirer fee of 185 deducted from a settlement; and interest received of 20.

The deposit and the cheque are marked outstanding. The charges, fee and interest are recorded in the books, which moves the book balance from 46,910 to 46,910 minus 45, minus 185, plus 20, which is EUR 46,700. On the bank side, 48,250 plus the deposit in transit of 2,050 minus the unpresented cheque of 3,600 is also EUR 46,700. The variance is zero, and 46,700 is the cash figure that belongs in the balance sheet.

• Dr Bank charges 45 / Cr Bank 45
• Dr Card processing fees 185 / Cr Bank 185
• Dr Bank 20 / Cr Interest income 20
• Adjusted book balance: 46,910 - 45 - 185 + 20 = 46,700
• Adjusted statement balance: 48,250 + 2,050 - 3,600 = 46,700
• Outstanding carried to May: deposit 2,050, cheque 318 for 3,600

Cheques, post-dated cheques and card settlements

Cheques cause most long-running reconciling items, which is why Treasury keeps Received Cheques, Issued Cheques and Cheque Books as registers, and PDC Management for post-dated cheques. A post-dated cheque received from a customer is not cash until its date and until it clears; keep it in the register, not in the bank balance, until it is actually deposited, so it never becomes a reconciling item. Review the Issued Cheques register at each month end for cheques older than your local validity period, which usually need to be written back rather than carried forever.

Card and gateway settlements arrive net of fees, often in batches several days after the sale. The clean treatment is to record gross takings through the location's payment method and its Default Account, typically a clearing account, and to record the fee when the settlement arrives, so that the settlement amount matches one line on the statement and the clearing account falls back to zero.

Transfers between your own accounts

Money moved between two of the company's own bank accounts appears on two statements, often on different days: the withdrawal from one account today and the deposit into the other tomorrow or later. Recorded as two unrelated entries, it produces two reconciling items and, at a month end that falls between the two dates, cash that seems to have vanished. Recorded as a single Transfer in Treasury, with both legs, it is matched once on each account and the timing difference is obvious.

Reconcile all of the company's accounts to the same date, and reconcile them together when transfers are frequent. At year end, auditors look specifically at transfers that leave one account before the year end and arrive in another after it, because recording the receipt early and the payment late makes cash look higher than it is. A transfer that sits outstanding across a month end should be explained by its dates, and should clear within a few business days.

Reading a reconciliation for warning signs

A reconciliation with a zero variance can still hide problems, because the risk sits in the outstanding items rather than in the final figure. The reviewer should read the list of outstanding items as carefully as the result, and ask for evidence for anything that does not clear on the next statement. The warning signs below are the ones external auditors test, and they apply to any business regardless of size.

• Deposits in transit older than three business days, a possible sign of lapping or fictitious receipts
• Cheques issued just before the month end but not presented for weeks, which may not have been sent
• The same outstanding item carried unchanged for several months
• Round-sum adjustments with no supporting document
• Receipts or payments recorded in the books with no counterpart on any statement
• Reconciliations completed late, or prepared and reviewed by the same person

Review, evidence and frequency

Print the completed reconciliation and file it with the statement. The reviewer, who should not be the person who records payments, checks four things: that the statement ending balance matches the statement, that the reconciliation starts where the Last Reconciliation ended, that each outstanding item is recent and specific, and that nothing was forced with an unexplained adjustment. The Reconciliation Report and Bank Balance Summary in Treasury give the overview across accounts.

Reconcile at least monthly, and weekly or daily for accounts with heavy card or payment-gateway traffic; small, recent differences are far easier to explain. Our guides on financial controls a small business actually needs and on roles, permissions and segregation of duties in Skyline Nexus ERP explain how to split recording, reconciling and reviewing in a small team, including the reconcile accounts permission.