Bank Reconciliation - Setup and Maintenance Overview

Before using the Bank Reconciliation system, you must follow the setup procedures outlined below. Setup procedures include items such as defining the banks and the accounts you do business with and entering initial account balances, setting up recurring adjustments and assigning codes and IDs. Follow the setup procedures carefully, because the choices you make determine how the system operates.

Gather and organize your accounting data:

  • a chart of accounts for your business
  • purchasing and payment cycles
  • identification and account information for your banks and bank accounts

To set up the Bank Reconciliation application, follow these steps:

  1. Use the Business Rules function to define how you want the system to work.
  2. Define the IDs and codes you plan to use. See Setting Up IDs and Codes.
  3. Set up bank accounts.
  4. Set up IDs and codes. IDs and codes tell the system how to identify each item on file. The system uses these identifiers to organize information.
  5. You must assign as ID to each bank account you use. Most functions require you to specify a bank ID for payments and receipts. For information about defining a bank account ID, see the Bank Accounts function.

Setup Checklist

___ Set all Business Rules

___ Edit or verify Code Descriptions and Reference Descriptions in Business Rules.

___ Set Up the Bank Accounts

___ Print the Bank Accounts List

___ Turn off the interface to General Ledger

___ Enter the outstanding transactions

___ Print the BR Journal to check the transactions

___ Post the outstanding transactions

___ Turn the interface back on to General Ledger.

Setup Procedures

Before using the Bank Reconciliation system, follow the setup procedures. Setup procedures include such things as defining the banks and the accounts you do business with, entering initial account balances, setting up recurring adjustments and assigning codes and IDs. Follow the setup procedures carefully; the choices you make determine how the system operates.

First, gather and organize your accounting data. You need the following information:

  • a chart of accounts for your business
  • purchasing and payment cycles
  • identification and account information for your banks and bank accounts with the most recent bank statement and check register

To set up the Bank Reconciliation system, follow these steps:

  1. Use the Business Rules function to define how you want the system to work.
  2. Define the IDs and codes you plan to use. See "Setting Up IDs and Codes" later on this page.
  3. Set up bank accounts:
    • If you have bank accounts set up in System Manager, those bank accounts will be seen in your Bank Reconciliation setup. All bank accounts are stored in the System Manager bank accounts tables.
    • If you are setting up Traverse or have no bank accounts defined in System Manager, use the Bank Accounts function to define bank accounts and to set up initial account balances for each bank account. See "Initial Balances" later on this page for more information.
    • If you incur routine service charges or other adjustment charges, use the Recurring Adjustments function to set up recurring adjustments records.

An application can be interfaced to work in conjunction with other applications. Bank Reconciliation can be interfaced with General Ledger. Accounts Payable/Purchase Order, Accounts Receivable/Sales Order, and Payroll can be interfaced with Bank Reconciliation.

General Ledger

When Bank Reconciliation is interfaced with General Ledger, posting bank reconciliation transactions makes entries for the bank account and the offsetting accounts in the General Ledger Journal. You cannot post transactions or void checks to closed accounting periods. Use the System Manager Period Conversion function to close and open accounting periods for Bank Reconciliation and General Ledger. Use the Business Rules function to interface Bank Reconciliation with General Ledger.

Accounts Payable/Purchase Order

When Accounts Payable/Purchase Order are interfaced with Bank Reconciliation, you can specify the ID of the bank account the checks will be paid from when you post payments from Accounts Payable. When a payment is posted to Bank Reconciliation, the BR Master is updated. Use the Accounts Payable or Purchase Order Business Rules function to interface the application with Bank Reconciliation.

Accounts Receivable/Sales Order

When Accounts Receivable/Sales Order are interfaced with Bank Reconciliation, posting accounts receivable transactions updates the BR Master with deposit records for cash and check receipts; sales amounts are not recorded in BR. Use the Accounts Receivable or Sales Order Business Rules function to interface the application with Bank Reconciliation.

Payroll

When Payroll is interfaced with Bank Reconciliation, posting payroll checks updates the BR Master.

IDs and codes tell the system how to identify each item on file. The system uses these identifiers to organize information.

IDs and codes tell the system how to identify each item on file. The system uses these identifiers to organize information.

When you assigned IDs and codes. establish a format that makes sense for your business and use it consistently. The following suggestions may help you to establish a useful format:

  • Do not use these characters in an ID or a code: | : ; & # @
  • To prevent organization problems, use zeros to make all IDs the same length. If IDs are divided into more than one part, the parts should be the same length in every ID. Do not use spaces to divide IDs into more than one part. For example, use ACE-01 and ACE-11 instead of ACE-1 and ACE-11 or ACE 01 and ACE 11.
  • If you use letters in IDs, use either all uppercase or all lowercase letters so that the IDs can be sorted correctly.
  • Use descriptive IDs. For example, WIN001 and WIN002 are more descriptive than 000001 and 000002.
  • If you want to sort items by a particular attribute - name or group - put the attribute in the ID. For example, to organize vendors by name, put the first characters of the vendor name in the vendor ID.
  • To ensure that new items can be inserted into a sequence, use a combination of letters and numbers that leaves room in the sequence for later additions. For example, WIN001 and WIN005 leave room for three IDs in between.

Bank Account ID

You must assign an ID to each bank account you use. Most functions require that you specify a bank account ID for payments and receipts. For information about defining a bank account ID, see the Bank Accounts function.

After you have set up your bank accounts, set up the initial balances of your bank accounts. Follow these steps:

Use the Bank Accounts function to enter the last statement balance and date in the bank account records. If Bank Reconciliation is not interfaced with General Ledger, enter the balance of the general ledger account assigned to each bank account record.

If Bank Reconciliation is interfaced with General Ledger and you must set up bank account initial balances, use the Business Rules function to turn off the interface between Bank Reconciliation and General Ledger. If Bank Reconciliation is not interfaced with General Ledger, skip this step.

Use the Transactions function, Bank Account Register function, and Post Transactions function to enter, verify, and post the outstanding transactions since your last bank statement. After you post the outstanding transactions, turn on the interface between Bank Reconciliation and General Ledger.

Use the appropriate application Business Rules functions to verify that applications you want interfaced are interfaced and that there are no invalid GL accounts. If GL accounts are not properly set up, errors can result.

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