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3 min 48 sec
0:00
Books versus bank
0:26
Why they disagree
0:52
Bank fees
1:11
One payment, two invoices
1:35
Finding the last gap
2:11
Reconciling in Beeswax
2:45
Recap and quiz
Accounting 101
·
Keeping it straight
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Episode 18
Bank Reconciliation
(Making your books and your bank agree.)
Maya's books and her bank disagree by more than four thousand. Work through the gap line by line, from bank fees to one payment covering two invoices.
bank reconciliation
bank fees
bank feeds
Transcript
0:00
It's the end of March. Maya's books say the studio has fifteen thousand, eight hundred and eighty-five in the bank. The bank says twenty thousand. Somebody's wrong. Maya suspects the bank. It's almost never the bank.
0:16
Today: bank reconciliation. Making your books and your bank agree, and finding out why they didn't.
0:26
Your books and your bank statement are two records of the same money, kept by two different people. You, and the bank. They should agree. They rarely do on the first try.
0:38
Not because anyone's lying. It's usually one of three things. Something the bank knows about and you don't. Something you know about and the bank doesn't, yet. Or a plain old mistake.
0:52
First, the bank knew something Maya didn't. Thirty-five in bank fees. Nobody sent her a bill. They just took it.
1:01
So it goes in the books. Debit bank fees, an expense, thirty-five. Credit the bank. The books come down by thirty-five.
1:11
Next, Harbour and Co. paid three thousand. One payment. But it covers two invoices. February's retainer, and March's.
1:21
So Maya matches the one bank line against both invoices, fifteen hundred each. Both invoices are paid, trade debtors come down by three thousand, and the bank goes up by three thousand.
1:35
Now the books say eighteen thousand, eight hundred and fifty. The bank still says twenty thousand. Eleven hundred and fifty apart. Maya sighs, deeply.
1:47
But look. On the thirty-first, Maya paid Rowan's bill. Eleven fifty. It's in her books. It hasn't reached the bank yet. It'll clear on the second of April.
1:59
That's a timing difference. Nobody's wrong. Add it back, and eighteen thousand eight hundred and fifty, plus eleven fifty, is twenty thousand. Reconciled.
2:11
In Beeswax, bank lines arrive through a bank feed, or a CSV import. Each one lands in Bank Feed Allocations, often with a suggestion already attached.
2:22
The fee? Allocate it to Bank Fees. Harbour's three thousand? Apply a Payment to an Invoice, spread across both invoices, until the amount remaining is zero.
2:34
Then the Statement Check compares your books with the bank's closing balance, and tells you exactly what's missing, unticked, or outside the period. Until it says reconciled.
2:45
So. Reconciling means making your books and your bank agree. Things only the bank knew about, like fees, go into your books. One payment can settle several invoices. And timing differences sort themselves out next month.
3:02
Quick one. Your books say ten thousand. The bank says ten thousand four hundred and eighty. You find a twenty bank fee you hadn't recorded, and a five hundred client payment you hadn't matched. Once you record both, are you reconciled?
3:17
Have a think.
3:21
Yes. Ten thousand, minus twenty, plus five hundred, is ten thousand four hundred and eighty. Reconciled.
3:29
Do it every month. It's much easier to find one mistake in a month than twelve in a year. Ask Maya. She's tried it the other way.
3:38
Next time: accruals and prepayments. Paying in one month for something you use over many, and doing the work before the invoice goes out.