Bank Account Statement Reconciliation

Reconciling bank account statement is one of the toughest activity of finance team. As there are hundreds and thousands of line items in the bank account statement it becomes very difficult to check if all credits and debits happening in the bank account are correct or not.

Challenges in bank statement reconciliation process:

• Manually categorize transactions as payables or receivables
• Manually attribute transactions to parties
• Extract UTR based on transaction pattern
• Handle reversal transactions
• Apply complicated formulas for reconciliation
• Result spread across multiple Excel files
• Difficulty in sharing results, analyzing it with colleagues
• Repeat the manual process daily or due to lack of bandwidth push the reconciliation activity to once a week or once a month

To overcome these challenges, we have built a system which can easily reconcile any bank account statement with internally recorded payable or receivable data, ERP or accounting system entries, partner reports, etc.

Setup of Bank Account Statement Reconciliation process in Cointab’s automated reconciliation system:

• Configure internal, ERP, accounting system report format (our software adapts to a business’s data format without making any change in the existing format or process)
• Configure partners report formats
• Configure reconciliation rules
• Automate data load via APIs, SFTPs, Email attachments, etc.

Once the setup is done, the entire bank account statement reconciliation process is fully automated:

• Data is automatically loaded in the reconciliation system on a daily basis
• Reconciliation is automatically triggered
• Post reconciliation, email is sent to concerned team with reconciliation summary of reconciled and unreconciled items
• Team can view the result on our Dashboard, analyze it, work on unreconciled items if any, share data with colleagues, partners

The reconciliation result consists of the following:

• Receivable Transactions
  • Reconciled Transactions
    • For a sale transaction, bank account should be credited
    • For a reversed sale transaction, bank account should be credited first and then debited
    • Consolidated expected amount from a party matches credit received in bank account
    • No “unknown” credit entry should be present in bank account statement
  • Unreconciled Transactions
    • For a sale transaction, bank account is not credited
    • A credit entry is present in bank account but it is not recorded as sale in internal data
    • Received credit is less or more than expected credit
    • For a refund sale, debit entry is missing from bank account
    • Reversal is processed without corresponding credit entry in bank statement
    • Unknown charges are levied on bank account

• Payable Transactions
  • Reconciled Transactions
    • For a payout transaction, bank account should be debited
    • For a reversed payout transaction, bank account should be debited first and then credited back
    • No “unknown” debit entry should be present in bank account statement
  • Unreconciled Transactions
    • For a payout transaction, bank account is not debited
    • A debit entry is present in bank account but it is not recorded as payout in internal data
    • Debit in bank account is less or more than expected debit
    • For a refund payout, credit entry is missing from bank account
    • Unknown charges are levied on bank account

As the manual work of data download, load, cleaning and applying reconciliation rules is done by the system, the Finance team can directly start analyzing the result and work towards closing unreconciled items if any, thereby saving a huge amount of time on a daily basis and increasing efficiency manifold.