Cash is a life blood of every business unit therefore Bank reconciliation is one of the most important and critical job of a business organization. It is the process by which a business unit can identify the actual difference of its cash balance between its own book of account and actual statement from financial institution i.e. bank.
It is necessary that company bank balance and book balance should match, but there might be difference between these two. The causes of difference are as follows.

1. Cheque issued but not presented for payment.
2. Cheque deposited but not cleared.
3. Charges debited by bank.
4. Interest credited by bank.
5. Error made either by bank or the company.

Bank Reconciliation statement

The records which contain the detail of differences with bank balance and company’s book balance is called bank reconciliation statement. This bank reconciliation statement is prepared at the end of every month by the accountant. The Performa of Bank Reconciliation statement is shown as follows.

The above Performa of Bank reconciliation statement explains briefly about how an accountant can easily find the difference on actual bank balance and company book balance. The balance of the Last row of the above statement must be match with actual bank balance. If there is any difference then the accountant must repeat the process until the balance is match.

Steps Followed In SAP for Bank Reconciliation

1. Upload Bank Line

Everyday bank has sent the bank transaction in a specific format to the treasury. It is the responsibility of a Treasury person to upload each line into SAP. The lines uploaded by the treasury are directly transferred to a main account (i.e. 512…..) positive and negative amount. The main account has also divided into two part i.e. incoming payment (511…10) and outgoing payment (511…20). The number assign for main bank account, incoming and outgoing payments are different for each bank.

2. Bank entry in Book

Every accountant has book various type of payments and deposit in SAP on daily basis. All the payments are booked in account using outgoing payment and deposits are booked using account incoming payment.

3. Reconciliation

As all the transactions are available in SAP, it is the time for accountant to reconcile each line from actual bank with line from book. For each bank the accountant has to perform the reconciliation process separately, once for Incoming and another for outgoing payments. When an accountant matches any transaction it automatically disappears from the list of available line in SAP.

4. Bank Reconciliation statement

Preparing bank reconciliation statement is the final step for an accountant. This statement is a detailed summary of all the bank transactions which do not match during the particular month. The transactions may be from bank line or from the book.

With the help of bank reconciliation statement one can identify the cause of differences between the cash and bank balance. Therefore, it is one of the most important processes of accounting for every company to ascertain the real cash balances at the end of the month.

How can we help?

Depending on the complexity of your business, most likely, you may not have the requisite time or resources to allot solely to ensuring accuracy of your reconciliations, while running your business. With the help of our competent finance and accounting analysts however, you can rest easy knowing that experienced people making sure that all your information are accurate.

With our bank reconciliation services, we can assist you with partial or full reconciliation including Reconciliation of bank records with internal records and Reconciliation of credit billings with internal records