How do you do a Bank Reconciliation in Sage 50?

What is a bank reconciliation?

The purpose of a bank reconciliation is to check that your company’s financial records match their bank statements and to ensure charges and interest payments are recorded. This will enable you to produce your own statement to compare the transactions. If they match, then your reconciliation is complete, and you can be confident that your tax reporting will be accurate.

Why is it important that you do a bank reconciliation in Sage 50 Accounts?

It is important to do a bank reconciliation because it will help you to identify errors in transactions and it lets you know that your bank balance matches what is in your accounts. This can also help identify fraudulent transactions and your bank reconciliation statement can flag up delays in cheque clearances.

How frequently should you do them?

Some people do their bank reconciliation daily, weekly, or monthly. We would recommend that you do them at a minimum, every calendar month end. If you run behind, we would also recommend that you definitely do them in line with your VAT returns to ensure everything is correct before you submit your return.

How do you do a Bank reconciliation in Sage 50 Accounts?

In the Bank Accounts module in your Sage 50 software you will have your list of bank accounts. Highlight the bank account you want to reconcile and click on Reconcile at the top. This will open the reconcile window.

Double check that the correct bank account is showing on your screen.

Go to the statement reference field, by default this shows you the nominal bank account code, todays date and the fact that it is the first one you have done e.g., 01.

You can add your own reference here, it could be the sheet number from your bank statement or a range of sheet numbers or just the month and year. But make sure that you always reconcile up to a calendar month end if you’re doing your bank reconciliations say, weekly.

The ending balance that is shown on the screen is the amount shown in your Sage bank account now according to the transactions that have been posted in and out of Sage, so if your banking is not up to date, transactions are missing or entered incorrectly, then this figure won’t be accurate. You would enter your ending balance figure here according to what your balance was at the end of the date you are reconciling up to from your actual bank statement.

In the statement date you would enter the date you are reconciling up to. The statement summary box also has the option to reverse a previous reconciliation and you can post here interest earned and bank charges, however even though these features are here, some people still prefer to post a bank receipt or payment for interest and account charges.

Once you have checked your details and clicked OK, this will open the next window.

The first thing we recommend you do, is check your last reconciled balance at the bottom agrees to the last reconciliation you did on Sage. This will appear in black if you have a positive figure in your accounts and red if you are overdrawn.

The top section is un-matched transactions. Those are things that are posted to Sage that you haven’t yet agreed to your actual bank statement.

Now it is time to grab you printed or online bank statement and to match what you find on your paper statement. Use your paper statement as your master guide and then find the transactions in Sage and match them from the top to the bottom. Highlight the entries you want to match and click the “match” button or double left click and this will move them from the top to the bottom.

If you establish that you have some things missing and you need to post them, you can do this from the reconcile screen by using the features at the top of the screen.

Once you have gone through the process of matching everything from the top to the bottom, check that you have a zero difference. If it is not zero, the first thing to check is that you ending balance is signed correctly. If you have an overdrawn balance or are dealing with a credit card make sure that you have entered it as a minus. Once your difference is zero you can then click “reconcile”. Please don’t click reconcile if your difference is not zero. If you don’t know what to do, please reach out to us and we can help you.

What happens next?

Having done your bank reconciliation and checked your difference is zero, the next step would be to run a bank statement to produce some evidence of what you have reconciled. I prefer to do it every calendar month and use this date range, assuming you have reconciled the whole of this period. This will produce a bank statement. The figure at the bottom should agree to the bank statement end balance that you have on your paper statement.

I would then run an unreconciled transactions report. Having now run these two reports I would then want to agree this back to the Trial Balance. You can run your Trial Balance report in the Nominal Codes module.

There may be certain errors on your bank reconciliation that you don’t know how to deal with and correct, these could be errors that reoccur quite frequently, and you are not sure what the best course of action is. There could be a number of reasons and it doesn’t necessarily mean they are wrong, but you may need support to understand where the errors have come from.

If you are looking for support in any areas of Sage 50, why not take a look at our Sage Lady Academy membership. This provides affordable training, support and mentoring from me on all matters relating to Sage 50 Accounts, bookkeeping and accounting principles via trainings, masterclasses and my weekly Sage Live Q&A. Find out more here

Or why not join our Sage50 Accounts Facebook support group here

01.11.2022

“Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.”

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