Best practices using Bank Account Management is not as complex as other financial applications, but your administration should give careful thought to the way it is used.   Bank Account Management provides two functions.  1) Gives the ability to enter a transaction posting to General Ledger, and  2) provides a robust tool for reconciling your bank’s bank statement to General Ledger.

(NOTE:  Separation of Duties will be covered in an additional blog post.)

This post covers the best use of the following features:

  • Adding Bank Accounts in Bank Account Management
  • Reconciling Bank Statements

Adding Bank Accounts in Bank Account Management

If your account structure does not use multiple funds, then use the following approach:

In Bank Account Management under Modify Bank Accounts, add the chart of accounts number for each bank statement you receive.  Set the opening balance to equal the ending balance reported on the last bank statement you received prior to using this application.  If entered correctly, you will not have to adjust this number going forward.  When you open a new bank account set up a new account number in your chart of accounts.  Then, add the new bank account to Bank Account Management.  The opening balance probably will be zero.

If your account structure uses multiple funds, then use the following approach:

Financials allows users to enter split transactions across multiple funds in all sub-ledgers, keeping each fund in balance.  Therefore you can use one bank account to pay bills and receive payments, even when the transaction crosses funds.  This functionality depends on the way you set up your chart of accounts, and how you configure Bank Account Management.  So, first, you will need to have an account number in your chart of accounts that is used in each fund.  Then in Bank Account Management, you will only use the account number associated with Fund 1, or the lowest fund number available.  Set the opening balance to equal the ending balance reported on the last bank statement you received prior to using this application.  If entered correctly, you will not have to adjust this number going forward.  When you open a new bank account set up a new account number in your chart of accounts.  Then, add the new bank account to Bank Account Management.  The opening balance probably will be zero.

Reconciling Bank Statements

This is simple.  Always reconcile each bank statement received in a timely manner.  It should not be hard, so don’t put it off.  To make it easier, try downloading your statements from the bank and import the file into Bank Reconciliation.  That will shorten the task considerably.  Once the Reconcile to Bank Statement section shows to be in balance, and the Reconcile to General Ledger section shows GL is in balance, then run the View Reconciliation Report.  Print the report and attach to your bank statement to have available for future audits.  Close the report.  Before leaving the screen, click the Finish button.

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