Bank reconciliation helps businesses to ensure that their books of accounts match with their bank statements. Microsoft Dynamics NAV makes this process faster and more accurate.
What is bank reconciliation in Dynamics NAV?
When businesses record their transactions in their internal bookkeeping software, that process only records the transaction without taking into consideration the cash flows. The inflow and outflow of money is tracked with the bank statement. At the end of the month, these two parts need to be reconciled to make sure they match and also check if there are any errors.
The bank reconciliation is typically a long and challenging task that can be made faster and simpler by using Microsoft Dynamics NAV.
How Dynamics NAV improves productivity with automated reconciliation
The bank reconciliation process used to be a manual, time-consuming task. Any mismatch between the bank statement and the accounting software meant the executive had to spend hours trying to figure out the specific entries or transactions causing the discrepancy.
Microsoft Dynamics NAV saves you time with its auto-reconcile feature. After you upload the bank statement into the system and choose the auto-reconcile option, you will find the line items matched to the bank statement and auto reconciled. The only effort left is to look at those transactions that are not reconciled.
Summary of steps to setup bank reconciliation in Dynamics NAV
- How to access the Bank Acc. Reconciliation window
- How to match entries to reconcile
- How to post the bank reconciliation
Step by step bank reconciliation process
How to access Bank Acc. Reconciliation window
To access the Bank Acc. Reconciliation window, simply use the search function. When you generate a new reconciliation and fill the required details like the bank account name etc., you have to work with two panes – the Bank Statement Lines pane and the Bank Account Ledger Entries pane.
The Bank Statement Lines pane shows the transactions on the bank statement. The entries in this pane can be auto-populated if you choose the “Import Bank Statement” option and you can manually make changes/adjustments to each line item. NAV also allows you to enter each line item manually by selecting the “Suggest Lines” option.
The Bank Account Ledger Entries pane, as the name suggests, shows the entries in your internal ledger for the bank account.
How to match entries to reconcile
The process of reconciling the line items on the Bank Statement Lines with the entries in the Bank Account Ledger Entries panes is called matching. You have the option to reconcile the two panes quickly by choosing the Match Automatically feature. The other option is to choose the Match Manually function.
How to post the bank reconciliation
The system will allow you to post a bank reconciliation if the Total Balance in the Bank Statement Lines matches with the Balance to Reconcile field in the Bank Account Ledger Entries pane. If there are discrepancies, you will have to look into the unreconciled line items and make changes/corrections based on your findings.
Discrepancies: Why they occur and how to resolve them
It is a very rare scenario when the balances in the two panes of Bank Acc. Reconciliation window match. During the course of the reconciliation period, there would have been adjustments, errors, and other reasons leading to a mismatch.
While the auto reconcile reduces the time and effort to reconcile most of the entries, the investigation of the unreconciled line items is still a manual process.
When a particular transaction is not reflecting in the bank statement, it may be an entry that was passed in NAV by mistake and needs to be reversed. If the transaction did occur, you can get clarification from the bank.
If there is an entry in the bank statement and the corresponding line item is missing in NAV, you can just create a new entry.
In some cases, you will find the entries in both the panes with a mismatch in the amount. Or you may find that the amount is matching but the ‘client name’ is different. In such cases, you have to manually check why there is a discrepancy and make corrections based on your findings.
Have you considered taking a step up and moving to Microsoft Dynamics 365 Business Central?
While NAV has been a good ERP solution for business around the globe, you will be able to transform your business by stepping up to Microsoft Dynamics 365 Business Central. With the built-in AI capabilities and seamless integrations with applications you already use, like Office 365, you will be able to improve efficiencies and make better decisions.