Bank Reconciliation
Match your bank statements with NetSuite transactions to ensure accuracy.
Reconciliation Overview
Bank Reconciliation Process
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┌─────────────────┐ ┌─────────────────┐ ┌─────────────────┐
│ BANK STATEMENT │ │ MATCH │ │ RECONCILED │
│ (External) │ ──▶ │ TRANSACTIONS │ ──▶ │ BALANCE │
│ │ │ │ │ │
│ Bank's records │ │ Compare & mark │ │ Books match │
└─────────────────┘ └─────────────────┘ └─────────────────┘
Why Reconcile?
| Reason | Benefit |
|---|---|
| Catch errors | Find entry mistakes |
| Detect fraud | Identify unauthorized transactions |
| Track timing | Know what's cleared |
| Accurate balance | Know real available funds |
| Audit compliance | Clean financial records |
Reconciliation Process
Step 1: Gather Information
Preparation
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Need:
✓ Bank statement (online or paper)
✓ Statement ending date
✓ Statement ending balance
✓ List of bank transactions
Step 2: Create Reconciliation
Start Reconciliation
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Bank Reconciliation #BR-001
├── Bank Account: Operating Checking
├── Statement Date: 2024-01-31
├── Statement Ending Balance: $45,678.90
├── Previous Statement Balance: $42,500.00
└── Transactions to Review: 127 items
Step 3: Match Transactions
Matching Transactions
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For each bank transaction:
1. Find matching NetSuite transaction
2. Verify amount matches
3. Mark as cleared
Deposits:
✓ DEP-001: $3,500 ← Matched
✓ DEP-002: $2,100 ← Matched
○ DEP-003: $1,800 ← Outstanding (not on statement yet)
Payments:
✓ Check #5001: $2,500 ← Cleared
✓ Check #5002: $450 ← Cleared
○ Check #5003: $800 ← Outstanding (not cashed)
✓ EFT #001: $1,200 ← Cleared
Step 4: Handle Differences
Reconciliation Differences
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Bank fees (not yet recorded):
└── Create journal entry: Bank Fees Expense Dr / Bank Cr
Interest income (not yet recorded):
└── Create journal entry: Bank Dr / Interest Income Cr
Errors:
└── Investigate and correct
Timing differences:
└── Outstanding checks/deposits - normal, will clear later
Step 5: Complete Reconciliation
Reconciliation Summary
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Statement Ending Balance: $45,678.90
Add: Deposits in Transit
DEP-003 $1,800.00
───────────
Subtotal: $47,478.90
Less: Outstanding Checks
Check #5003 ($800.00)
Check #5004 ($3,200.00)
───────────
Adjusted Balance: $43,478.90
Book Balance (NetSuite): $43,478.90
Difference: $0.00 ✓ Reconciled!
GL Impact
Reconciliation itself doesn't post GL - it just marks transactions as cleared.
Bank Fees
| Account | Debit | Credit | Why? |
|---|---|---|---|
| Bank Fees Expense | $25 | Fee charged (Expense ↑) | |
| Bank Account | $25 | Money deducted (Asset ↓) |
Interest Income
| Account | Debit | Credit | Why? |
|---|---|---|---|
| Bank Account | $10 | Interest added (Asset ↑) | |
| Interest Income | $10 | Income earned (Revenue ↑) |
NSF Check (Bounced)
| Account | Debit | Credit | Why? |
|---|---|---|---|
| Accounts Receivable | $500 | Customer owes again (Asset ↑) | |
| Bank Account | $500 | Deposit reversed (Asset ↓) | |
| Bank Fees Expense | $35 | NSF fee (Expense ↑) | |
| Bank Account | $35 | Fee charged (Asset ↓) |
Outstanding Items
Items recorded in NetSuite but not yet on bank statement:
Outstanding Checks
Outstanding Checks
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These checks were written but haven't cleared the bank:
Check # | Date | Payee | Amount
─────────┼───────────┼─────────────────┼──────────
5003 | 01/20 | Utility Co | $800.00
5004 | 01/25 | ABC Vendor | $3,200.00
5007 | 01/28 | XYZ Supplier | $1,500.00
─────────────────────────────────────────────────────
Total Outstanding Checks: $5,500.00
Why outstanding?
- Check mailed but not cashed
- Check lost in mail
- Vendor hasn't deposited yet
Deposits in Transit
Deposits in Transit
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These deposits were made but haven't posted to bank:
Date | Reference | Amount
──────────┼────────────┼──────────
01/30 | DEP-003 | $1,800.00
01/31 | DEP-004 | $2,500.00
──────────────────────────────────
Total Deposits in Transit: $4,300.00
Why in transit?
- Deposited after bank cutoff
- Weekend/holiday deposit
- Mobile deposit processing
Common Issues
Reconciliation Won't Balance
Troubleshooting Steps
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1. Verify statement balance entered correctly
2. Check all transactions marked correctly
- Cleared items should be on statement
- Outstanding items should NOT be on statement
3. Look for:
- Duplicate transactions
- Transactions in wrong period
- Missing transactions (fees, interest)
- Amount differences
4. Compare:
- Total cleared deposits vs statement
- Total cleared payments vs statement
Missing Transactions
Finding Missing Transactions
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Not in NetSuite but on bank statement:
Common causes:
- Bank fees not recorded
- Interest not recorded
- Automatic payments not entered
- Wire transfers not entered
- Credit card payments not entered
Solution: Create journal entry or appropriate transaction
Old Outstanding Items
Stale Outstanding Items
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Check #4500 from 6 months ago still outstanding?
Options:
- Contact vendor - was it lost?
- Void and reissue
- Write off (if unclaimed)
Typical cutoff: 90-180 days
Best Practices
| Practice | Benefit |
|---|---|
| Reconcile monthly | Catch issues early |
| Reconcile promptly | While fresh in memory |
| Investigate differences | Don't force balance |
| Document adjustments | Audit trail |
| Review old outstanding | Keep list clean |
Quick Reference
Reconciliation Formula
Bank Statement Balance: $XX,XXX.XX
+ Deposits in Transit: $X,XXX.XX
- Outstanding Checks: ($X,XXX.XX)
+ Errors (bank's): $X,XXX.XX
─────────────────────────────────────────────────
Adjusted Bank Balance: $XX,XXX.XX
Should Equal:
Book Balance (NetSuite): $XX,XXX.XX
+ Unrecorded deposits: $X,XXX.XX
- Unrecorded fees: ($X,XXX.XX)
+ Interest income: $X,XXX.XX
─────────────────────────────────────────────────
Adjusted Book Balance: $XX,XXX.XX
Reconciliation Status
| Status | Meaning |
|---|---|
| In Progress | Not yet complete |
| Reconciled | Balanced and closed |
| Submitted | Pending approval |
| Approved | Fully approved |