CRS Content Team
Reconcile bank transactions
One of the keys to keeping good records of your farm finances is regularly reconciling all transactions for a period to your bank statement.
After you have imported your bank transactions and before you file your GST return, you must show that your transactions reconcile perfectly to each bank statement throughout the year.
If they don’t match, a transaction has either been missed in Cashmanager RURAL, entered twice, or just incorrectly entered.
Why do you need to reconcile?
Reconciling to the bank ensures that the transactions you have recorded have a corresponding (and matching) transaction through your bank statement.
It ensures that your opening bank balance for a period (the money you have in the bank at the start of the month), plus all transactions in and out as recorded in the Transaction screen equals what the bank says your closing balance is (how much money you have in the account at the end of the period).
All transactions, regardless of whether they have been reconciled or not, will appear in other areas of your farm business.
All unreconciled transactions appear in the following areas:
- The GST report for the current or next period
- Includes all transactions dated within the period
- Your actual cashflow
- Distorts the monthly balances
- End of Year accounts
- Unbalances the Accountants Annual report
By regularly reconciling and immediately correcting any problems that show up with your transactions, such as incorrectly entered, or duplicate transactions, you can assure your accountant and bank manager that you know what you are doing.
How to reconcile
Whether you have been entering transactions or importing downloaded bank statements, the process to reconcile is the same.
From the Transaction screen click Reconcile on the Toolbar or click the Edit menu and select Reconcile.
If you track more than one bank account in Cashmanager RURAL, select the correct account from the dropdown list.
Unless you haven’t reconciled transactions in Cashmanager RURAL before, the previous statement’s closing balance as entered into Cashmanager RURAL will appear as the opening balance for the new page.
Enter the closing balance amount from the bank statement.
Statement Closing Date
Enter the statement closing date from the bank statement
Don’t forget: If the opening or closing balance is in overdraft, enter a (-) sign before the figure e.g. -44727.88
Use your bank statement as the best source of truth. If there is a transaction recorded in Cashmanager RURAL that lines up to a transaction on the bank statement, match it by clicking on the Matches button.
This will highlight the transaction green and insert the statement/page number into page column. Any transactions that don’t appear on your bank statement should be skipped by clicking No Match.
This will leave the transaction unreconciled (yellow) and without a page number so that you can deal with it before finalising your GST return for the same period.
Tip: To quickly match or no match transactions, use M (Matches) or N (No matches) on your keyboard. It doesn’t matter if Caps Lock is on or off.
The bottom left corner of the Transaction screen displays the information you entered before starting this process.
The Statement Closing Balance (the figure you entered) needs to match the Computer Closing Balance (the total of all transactions matched) before the page will be balanced.
Once the Balance Error displays $0.00, click Done. A Reconciliation report for the period will appear for you to either print or close.
What to do with unreconciled transactions
Now that you’ve reconciled and balanced your bank transactions you need to make sure there aren’t any unreconciled transactions left behind.
The primary reason is your GST return. The last thing you want to do is incorrectly claim or declare GST on an item, and have to fix it up later.
In the Transaction screen, click on the Filter button from the toolbar. Tick the Unreconciled box and click OK.
If there are unreconciled transactions remaining, they will appear in Transaction screen and need to be dealt with.
If the transaction has been entered more than once into Cashmanager RURAL and one has been reconciled to the bank statement, any remaining identical transactions need to be deleted from the Transaction screen.
Unpresented Transactions (cheques)
If you manually enter transactions into Cashmanager RURAL, such as cheques, it may not be presented at the bank in the time you expect. To avoid the transaction being included in the wrong GST return, edit the transaction and change the transaction date to fall after the current GST period.
Unreconciled transactions in a Final GST return
If you discover that transactions have been included in a final GST return, a reversal transaction will need to be created to correct the error.
Tip: Click on the Filter Clear button along the toolbar to revert your Transaction screen back to its normal view.
Reconciling when Invoice Basis
If you are registered for GST on invoice or accrual basis, you will be prompted to enter an actual transaction date while in reconciliation mode.
When you first entered the transaction you had the option to leave the transaction date blank, as the date needed here was the date the item was invoiced, not when the payment was processed by the bank.
While matching the entries to the bank statement you will need to enter the transaction date.
- The GST report for the current or next period