Posted: 13 January 2010The Future of Bank Reconciliations

An interesting new methodology has evolved from the new way Peresoft's RecXpress does a bank recon. It would be interesting to see what other users think of this.

Originally when I first sold CB I had to convince my clients to throw away their cash book (yup, a physical book) and start to do things electronically. It took quite a bit of convincing and sometimes it would take quite a while for them to change.

But once they changed they never looked back. Today we have nobody using a book anymore.

Now we want to change the user's mindset again. Here is how.

All Cashbooks around the world are written in a manner that the users enter all their Cashbook entries and then compare the Cashbook balance to the bank balance. This process is done by first ticking off what is in the bank and then entering batches of what is not in the bank. Again ticking off what has been posted and then looking at the variances that were uncovered. Finally these batches would be posted and a final recon would be performed again by ticking off this and that. 

Hopefully this would not take too long and at the end of the recon everything would balance and the Cashbook's bank balance would match the bank statement. If it did not a major checking exercise would have to be performed to find the erroneous entry or entries.

We at Peresoft realised that this is not the best way to perform a recon. In fact it is completely the wrong way and is open to all kinds of mistakes. 

The best way to do a recon is to go from the Bank Balance and reconcile back to the Cashbook balance. Firstly it is much easier and faster, secondly you would be working from the correct balance from the beginning.

This is now part of the new RecXpress. We call it the six step program because after six simple steps you should have completed your bank reconciliation.

1. Create a template of all bank entries that are processed monthly. This template can be improved each month until 99% of entries are included.

2. Allow RecXpress to do intelligent matching in every possible way.

3. Tweak the reconciliation by matching one to many or many to one.

4. Generate and post a batch of all the unmatched entries.

5. Generate and post a variance batch of entries with errors.

6. Post the reconciliation to update the bank statement balance in Cashbook.

To understand this six step program please read our RecXpress release article "Revolutionize your Bank Reconciliation Process with RecXpress 5.6A"