Bank Reconciliation in Zoho Books

Bank Reconciliation process –

The goal of this process is to find the differences between the two, and to correct or make changes to the records as appropriate. Other than matching of balances, bank reconciliations have many other uses. Bank reconciliations also help in identification of errors.

What are the reasons for differences between the two records?

The most common reasons of differences are –

• Cheques deposited but not collected by bank
• Cheques issued to parties still not submitted to bank and not debited in our account
• Bank fees and charges

This article relates to bank reconciliation in Zoho Books. Recommended reading – bank reconciliations. Our earlier article certainly highlights the general bank reconciliation process.

The Banking Dashboard

The banking section of your dashboard gives you a bird’s-eye view. It shows your expected recurring payments, balance mismatches, past transactions, and past reconciliations. It is a quick and easy way to keep track of your banking activities within Zoho Books.

Bank Reconciliation in Zoho Books

There are two ways to do a Bank Reconciliation in Zoho Books.

1) Automatic Bank Feeds

2) Bank Reconciliation with bank Statement

Automatic Bank Feeds and bank reconciliation in Zoho Books

Usually, everyone reconciles bank accounts on a monthly basis. that is, when the bank issues the statements . However, Zoho books allows you to connect your bank account. Your bank feeds are automatically captured in your books, that too on a daily basis. These up-to-date transactions include amounts, descriptions, and names of the payers and payees. The process of manual uploads and updating of transactions is avoided.

How do bank feeds help in Reconciliation in Zoho Books?

Once enabled in Zoho Books, download of bank feeds is automatic. All transactions appear in your accounts. This eliminates the possibility of mismatch of balances. Hence, the only task left is categorisation.

Categorisation of transactions in Zoho Books

Th only thing left to do is categorisation of each transaction. Categorisation involves selecting the right account/contact for the transaction. A single transaction might have many effects. In order to give complete effect to it, splitting the amount will help. Splitting a single entry/transaction into multiple accounts is also possible. As you categorise each transaction, it updates the balance in the bank account. Entries may be manually added at the beginning & matched during the reconciliation process. When matching transactions, you can view only the best matches or all possible matches. Best matches are transactions that are on the same date or have the same amount. Possible matches are all transactions recorded within the last 90 days before the statement date. For most transactions, you’ll find the right fit among the best matches. If having trouble matching a transaction, you can check the possible matches instead.

Bank Reconciliation in Zoho Books with Bank Statement: –

Certainly, Balance sheet errors and mismatches can cause serious problems. Reconciliation prevents problems by ensuring that Balances as per your bank & books match. In Zoho Books, your account reconciliation happens with a few clicks. To reconcile your bank using this method

1) In banking, go to the bank which requires reconciliation

2) Go to the COG icon (“Settings”)

3) Click “Reconciliation History”. If the accounts have ever been reconciled earlier, it’ll show those details. If not then it’ll be blank

4) Click the “Reconcile Account” button. Enter the closing balance as on the last date of the reconciling period. Press “Start Reconciliation”

5) Select all the transactions that match or appear as the bank. Addition of transactions such as bank interest and bank charges is also possible

6) keep on adding and matching transactions till the balances match.

Conclusion

For your bank reconciliation needs, always use either of the above methods. Selection of the methods depends on the operations and business needs. Using both methods together at the same time is also possible. Reconciliation of entries done through bank feeds with bank statements is also possible. Though not necessary, the business polices and practices may need this.