Reconciliation Rules
Creating a reconciliation rule entails linking one or several GL transaction codes to one or several bank transaction codes. This link is used to identify entries of the same type, from the General Ledger and the Bank statement. Upon identification, only GL and bank entries of the same amount are reconciled.
Then, criteria are used in conjunction with the reconciliation rules to differentiate entries of the same type and amount. Without the criteria, it would not be possible to reconcile several entries of the same type when their amounts are the same.
Example
Frequently, your company’s accounts are debited several times for the same amount, for similar transactions. It may therefore be advantageous to assign a date criterion to the transaction code, both for GL and bank entries. To avoid the possibility of entries with the same Type, Amount and Date, you will have to create an additional criterion, such as a Document Number.
The way in which reconciliation rules are set plays a key role in the quality of the automatic reconciliation process. This step is therefore essential.
The quality of the reconciliation rate depends both on a fair match between GL and Bank transaction codes, and on the relevance of the associated criteria.
There are two different types of reconciliation rules:
- Simple rules which allow reconciling one bank entry with one GL entry
- Advanced rules which allow reconciling:
- 1 Bank entry with x GL entries
- 1 GL entry with x Bank entries
- x GL entries with y Bank entries
Entries are first reconciled according to the simple rules. Advanced rules are applied to the remaining entries.
The reconciliation rules are also used to define the terms for cancelling Bank or GL entries.
The default elements used for automatic reconciliation are the following:
- Account
- Link between Bank Transaction Code (BTC) and GL Type Code
- Amount
These rules can be supplemented by an unlimited number of additional reconciliation criteria.
Important
When a Bank entry and multiple GL entries of the same amount are detected in the Reconciliation module, the Bank and GL entries are not reconciled. They are assigned the Pre-reconciled default status.
Reconciliation rules can be specified for the following levels:
- Company
- Bank
- Bank Branch
- Account