Using bank spend to pay multiple invoices versus bank reconciliation

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My accountant says that I need to ensure that what amounts are showing in bank spend in manager match what is showing on actual bank account.

For example, I could pay two invoices to the same company - in the past I made one payment on my bank account, but I would have done spend money for each invoice in Manager thus resulting in two payments. Same concept with depositing multiple cheques from different customers. I would result in one amount on my bank statement, but several transactions in bank receive.

Following the guides, I have worked out that I need to go to bank spend money and select accounts payable (or bank receive - accounts receivables) and I can select the relevant invoices.

This is straightforward when I am in control of the bank spend or receive - either I do a bank transfer or I deposit cheques on the day I do the transaction in manager.

However, I am not sure how bank reconcilation works in the sense of exactly what do I want to reconcile. I will give you two transactions for example!

My broadband bill might come off on the 5-8th of the month. Normally what I did in the past is that I saw that the broadband bill had come off, so I would create the invoice and do bank spend.

Another type of transaction would be something like me buying stuff online today, so I would create the purchase invoice, but the money would only come off the account a couple of days later.

A third transaction might be one showing on the bank statement, but for which I have not yet received the invoice!

Does bank reconciliation just match amounts in Manager with the bank statement or would it change the dates to whatever date is showing on the bank statement. How does this affect say the broadband invoice in the sense would it matter if the money comes out of the account (in Manager) before the date of the invoice in Manager?

I have never used the bank reconciliation partially because I don’t know how it works in Manager, partially because I don’t know whether I should be reconciling dates of the transactions or just reconciling the transactions as in to whom, from who and amount type detail. Also I never knew that I could pay several invoices in one bank transaction in Manager!

I have read the guide for bank recon, but I thought that I would ask her as I don’t want to make mistakes with doing this.

1 Like
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A few ideas:

  1. Are you using uncleared payments and deposits in Bank Accounts tab? This is exactly what they are for. If you are not familiar, you can spend and receive money exactly like you do within the statement balance column. These will show up on the reconciliation report, but the net shows under actual balance (what the reconciliation report calls balance as per balance sheet. This is what shows in the Summary, too.

  2. You should enter these transactions as of the date they are valid, according to your accounting method (cash or accrual). When the deposit or payment clears, you can edit the transaction to show it as cleared and enter the date it appeared on your bank statement.

  3. I find bank reconciliation is somewhat tricky if you reconcile as of the day of the transactions. I’ve never quite figured out what order Manager does things in, but I often have trouble when all numbers appear correct. If I wait until the day after transactions are entered or cleared, all works fine. And the reconciliation process accounts for the uncleared instruments as long as you put in the actual numbers from the bank statement.

  4. So far as I know, reconciliation just compares bank and Manager balances date by date, subject to the confusion mentioned in #3.

  5. I’m sure those with higher transaction volumes might have different opinions, but I personally don’t pay much attention to the built-in reconciliation process, and certainly not to the assistant. I seldom have more than a few bank transactions in a day, and do all my banking online. In fact, most of my payments (such as for utilities) are to entities that have electronic banking relationships directly with most local banks. Clearing is very quick. So I can just visually compare Manager’s balance with what the bank’s screen is showing me. Only when a supplier is very late processing their end of the transaction do I have to go hunting for things. (You can rest assured that I deposit all my cheques instantly. :relaxed:)

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  1. Yes I do use uncleared payments and deposits. That is very useful in situations when I control when the transaction is occurring such as me buying stuff today and I know the money will come off in 2 days or me depositing cheques and I know the money will come in after three working days.

  2. Not a bad idea to edit the date of bank transaction when it clears!

  3. I only intend to do bank recon once a fortnight or something. I don’t get that many transactions that it would be worthwhile doing for less. I will give it a go and see how it works.

  4. I will see if I can match things up by date as I have found that it is very helpful in trying to find that missing amount somewhere if you know the balance after each transaction.

  5. The assistant is of not much use to me as I won’t know the balance at the end of the day, only the balance after each transaction.

As its now the 15th, so halfway through the month, I will give bank reconciliation a go and see if all goes well. I am making a backup before I do anything!

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Yes, especially since the original transaction date is preserved in Manager.