Standardization of Bank Reconciliation Process

Hello All,

My company has been exploring ERPNext for over a year now. We have found the platform to be very well developed and supported by a great core foundation and active community. The system encompasses nearly all benefits that a company hopes to realize in adaptation of an ERP system. However, one area I find that could use some enhancement is the bank reconciliation.

After review of the forums and documentation it appears that the bank reconciliation process in ERPNext seems somewhat undefined.

Other prominent accounting software such as QuickBooks, Peachtree, Dynamics, etc. follow a similar model that seems to work very well. I believe this framework has been standardized and ERPNext should follow suit.

I’ll use QB as my example. The process of the bank reconciliation consists of two separate steps: setting up the rec and performing the rec.

1. Setting up the Rec

Typically, most recs begin with the user inputting the following information:

  • Account to be reconciled
  • Bank statement date (month being reconciled)
  • Ending balance as per bank statement

The system indicates the last reconciling of the particular account and will also fetch the beginning balance (ending balance from last reconciliation performed).

Once this information has been entered the user clicks continue.

2. Performing the Rec (Clearing Transactions)

The next screen would populate all transactions against the specific bank account that have not yet been cleared on a previous rec. Ideally the transactions are sorted into two categories, “Funds Paid” and “Funds Received” for easy identification.

As the user goes through and updates the clearance date for all transactions on the bank statement, the progress is tracked and updated.

Showing the total items cleared helps the user identify if they are perhaps missing a transaction that needs to be added into the system. Eventually when the difference equals zero the user clicks reconcile and a report is published. This creates a nice clean report for each month the account was reconciled that can be easily accessed and archived.

If the difference is not equal to zero and the user clicks reconcile a message should appear to inform the user of the difference. In order to continue, an adjusting JE will need to be entered to account for the difference.

I’m curious to know if other ERPNext users are having some functionality issues with the bank reconciliation process and have interest in enhancements.

If so, I will post the job on ERPNext’s bounty source and also contribute to the project (monetarily that is, as I have no developer/coding skills).

Thanks!
Steve

1 Like

Hi,

Have you seen https://frappe.github.io/erpnext/user/manual/en/accounts/tools/bank-reconciliation?

As far as I see, the step “setting up the rec” is performed by looking at the Bank Reconciliation Statement and the step “performing the rec” is performed by using the Bank Reconciliation Tool.

The main difference I see is ERPNext doesn’t quite hold your hand by saying “If the difference is not equal to zero and the user clicks reconcile a message should appear to inform the user of the difference”, but the functionality is there.

@sellisjr,

I completely agree with you and only just dropped a similar comment (but not as exhaustive as yours) in the bottom part of this post here:

@felix
The Bank Reconciliation Tool as it’s implemented in ERPNext is not quite complete. It is only capable of matching Payments that have already been booked manually into ERPNext with bank statement upload with the only purpose being to synchronize the value date of the Payment document booked in ERPNext with the actual value date coming through in the bank statement. The tool as it stands today does not make any postings of its own.

Ideally, the Bank Reconciliation Tool should be able to post Journal Entries between Bank and Bank Clearing accounts for incoming and outgoing payment scenarios. These will then be matched by the payment booking which posts between 3rd party and Bank Clearing accounts (outgoing payment scenario)

@sellisjr I’m happy to contribute to this by contributing to a bounty and to a specifications document. Do post a link to the bounty that you raise.

Regards,
cksgb

@felix @Chude_Osiegbu

Thanks for the input. I’ll be posting the link to the bounty tomorrow.

Hoping to get a bit more feedback from other users. Appreciate the responses so far.

Regards,
Steve

There is a GitHub issue open for this #5903, you could let us know if any of you would be able to contribute/sponsor the feature?