Why should I bother reconciling the bank account? Well, throughout the weeks you will be entering lots of different types of information into Sage. Even at our most careful and efficient level, nearly everyone makes a mistake! So how can we find out if we have made an error? In accountancy we take the information from the bank statement as ‘almost’ 100% accurate (ok banks do make rare mistakes!).
So the bank statement is a crucial document, as it is EXTERNAL to the business and proves exactly how much money the business has or owes! Rather than the owner telling their accountant they have ‘enough’, ‘not enough’, ‘a few hundred’ etc…….. in reality, most accountants will usuallywant to confirm that the balance in the clients accounting system agrees to the bank account.
Therefore the bank ‘Reconcile’ function on Sage is to me one of the MOST important areas to a business. This function simply matches the information contained in Sage with what ‘actually’ went through the bank account. If you fail to reconcile the bank then your financial data will almost certainly be incomplete, contain errors and possible cost you a lot more Tax, Vat or both!
Bank Reconciliation – Sage
To find the reconcile function go to ‘Bank’. Then single click the account you wish to reconcile. Above you will see a ‘Reconcile’ button, click this.
Enter the statement reference. This should be the bank statement number.
The ‘Ending balance’ should be the closing balance on the statement, say £2,000 on the 19th May.
The ‘Statement date’ is the date of the last balance shown on the bank statement, ie 19th May. Click ok. Sage works completely on dates, therefore it will now only show you entries dated before or on 19th May.
You should see a list in the top part of the screen of all the items that have not yet been ‘Matched’ to the bank statement. ‘Matching’ means agreed or found.
As you find each transaction on the bank statement, either double click it, or highlight it and then click the ‘Match transaction’ button on the right.
If you have to stop half way through, you may be interupted, or you realise that you have made a mistake, then you can click ‘Save’. This will save all the work you have done, you can then come back to it at a later time.
Do not press reconcile until the ‘Difference’ figure equals zero. This is VERY VERY important. The purpose of the ‘Difference’ button is to highlight that the balance Sage ‘thinks’ is in the bank account, and the actual ‘Ending balance’ on the bank statement MUST be the same.
If, after ‘matching’ each of the transactions on the top half of the screen you still have a difference, then double check the bank statement and see if you have any entries on the statement that you have not already entered. You should leave the ‘Reconcile’ screen, by pressing ‘Save’…go and enter the transaction, then come back to the ‘Reconcile’ module.
When returning to continue reconciling the bank account, you will again click ‘Reconcile’, however this time Sage will tell you that you have a previous ‘Saved’ reconciliation. You can select to use or discard this. Choose ‘Use’. You will now see the transaction you have just entered. Ensure it is selected, then hopefully the balance in the ‘Difference’ box should now be zero.
The ‘Adjustment’ button allows you to enter very simple items, eg. a bank charge, rather than you having to Save and then leave the reconcile module.
Bit by Bit is easier
A very helpful tip when reconciling the bank account on Sage is to reconcile the bank statement in say two or three steps. Say your statement covers 10th to 19th May, rather than try and reconcile the whole page in one go, draw a line say half way down the page, at say 15th May,then reconcile using this date and ‘Ending balance’. This way you have less transactions to handle.
Is the date correct?
Finally. If you cannot find a transaction on your Sage ‘Reconcile’ screen, but you are SURE you have entered the transaction but it isn’t showing up, then it may be that you have entered the transaction with a later date, ie 21st May. This will mean that the transaction should not be re-entered, but rather you simply need to edit the date back to the 19th. I always check this, otherwise it’s VERY easy to end up with duplicate bank entries!