Eliminating Noise: Tips to Make Bank Reconciliations Easier
Bank reconciliations have been on my mind lately. I recently worked with a client on theirs, and it was an eye-opener—not just in terms of best practices, but also what to avoid. Small changes can make a big difference in simplifying the process.
Here are a few practical ways to streamline your bank reconciliations:
Deposits
Ensure deposits in Visual match the deposits on your bank statement. A few ways to improve consistency:
- Each Deposit ID should include all payments that make up that deposit.
- The Posting Date in cash application and the Deposit Date should be in the same accounting period.
- Record non-customer cash through Cash Application.
- For customer payments received directly into the bank, assign a unique Deposit ID for each one.
- If bank fees are deducted from customer payments, record the cash receipt net of those fees.
When done correctly, the total deposits in Edit Reconcile should match the total deposits on the bank statement—making reconciliation much smoother.
Handling Errors (“Oopsy” Moments)
Mistakes happen. Vendor payments may be voided, or adjustments may be entered incorrectly (for example, recording a bank charge as a deposit instead of a withdrawal).
Correcting these errors typically creates three entries:
• The incorrect posting
• The reversal
• The corrected entry
This adds “noise” to the cashbook and can clutter your reconciliation.
To keep things clean, consider clearing these items separately from your main reconciliation. For example, clear them on a consistent date such as the first day or last Sunday of the month. Then run a mini “Edit Reconcile” for that date. Since these entries should net to zero, this approach helps isolate and eliminate unnecessary noise.
General Ledger Alignment
The cashbook balance should always match the General Ledger.
For foreign currency accounts, ensure the balance agrees with the “account-at-native” value in the Accounting Window.
To calculate the running bank balance:
• Enter the first day of the prior month as the start date
• Use month-end as the end date
• Select “Show Cleared”
Visual will calculate the balance, which appears as the last line in the cashbook.
If it doesn’t match, possible causes include:
• General journal entries posted directly to the GL
• Incorrect transaction dates
• Items not posted to the GL
• Zero-value batches
Using Excel for Reconciliation
The Edit Reconcile function is great for confirming transactions have cleared properly —but a full reconciliation is still essential.
Yes, it’s satisfying when the difference is zero. But when it’s not, the challenge begins—especially when multiple items are causing the discrepancy.
A structured Excel reconciliation helps identify issues more efficiently:
• Bank statement balance
• Less outstanding items
• Compare to the cashbook balance
To extract outstanding items from Visual:
- Leave Begin Date blank
- Set End Date to the reconciliation date (typically month-end)
- Ensure “Show Cleared” box is unchecked
- Export to Excel (or copy/paste the data)
From there, you can easily use this in the reconciliation. And now you have an electronic list.
Next Steps
I hope these tips help make your bank reconciliations more manageable and less frustrating.
That said, this is just the tip of the iceberg. There’s much more to cover. I had to stop myself from writing more. Now I’m considering offering a half-day remote course to go deeper into these topics.
If that’s something you’d be interested in, let me know—I’d be happy to share details when it’s scheduled.
