Bank Reconciliation

Bank reconciliation or statement check

Overview

What is bank reconciliation?

Bank reconciliation is simply where you cross check (reconcile) transactions in Beeswax against transactions at your bank. Some people call this a bank statement check, which is technically what it is.

The reconciliation process is one of the most important activities that every business needs to do and is one of the key things that a book keeper does.

Why is reconciling your Bank Account so important?:

  1. It ensures that your Bank entries are correct. While it is rare for banks to make mistakes these days with the advent of electronic banking, it’s not impossible. It also ensures that you or your staff haven’t entered things incorrectly too.
  2. If you’re still dealing with cheques then this is clearly important to ensure you the cheque actually gets deposited into the correct account or that is gets deposited at all.
  3. It ensures that all the transactions that appear on your bank statement accurately match all transactions in your Beeswax account.
  4. It ensures you don’t record double payments for expenses. Easily done in a busy business.
  5. It helps to avoid fraudulent activities. When done by an external book keeper it avoids any possible conflict of interest where fraudulent payments could be generated and processed if done by an employee with responsibility for both activities.
  6. If done by the owner of the business it also highlights any expenses that shouldn’t exist. Such as over running subscriptions that someone forgot to cancel.
  7. It also can help identify where savings could be made.

How's it different in Beeswax?

Beeswax approaches bank reconciliation in it’s own unique way. Some might even say it’s a little “old school”. But it’s old school with a modern twist. The bank reconciliation process (and definition) differs between accounting applications. Just importing and allocating transactions from your bank is not reconciling. on an ongoing basis and rely on printing out reports in order to match records of what you’ve done. If for some reason something changes that may throw the reconciliation out you may not even know unless you retrospectively analyse your Accounts. Even then it can be hard to find where the error is.

Paper is good!

Beeswax assumes you get regular statements (usually monthly) sent to you by the Bank. These are now often sent as an electronic PDF statements (paperless option) but either way the Bank is required ( by law in certain countries) to provide you with a Statement of some kind. Full Stop. You get them so you should use them. Regardless of how you get them ( sometimes you may wish to simply log into your bank online and download a copy), Beeswax suggests you print it out (yes old school) and work from a physical paper statement when reconciling your account. More on this later.

If someone told you about a special type of display technology that was not only cheap but super light and portable, had ultra high contrast with incredible resolution, and was foldable and recyclable, then you’d probably want it right? Yeah... it's paper and it works well.

It’s just more practical to be using a highlighter to check things off rather than trying to do this electronically bouncing around between screens. We know. We’ve tried it. Yes it’s old school but why change a perfectly good process when it works and works well.

The Statement

Beeswax allows you to create a New Statement under the Bank Account that you wish to reconcile and enter the Opening and Closing balances as well as the Start and End date of the Statement.

Opening and Closing balances

Start and End dates

Current Financial Year

Generally speaking once you done with a Financial Year then you generally don't need to focus on it. So Beeswax just focuses your attention on the current Financial Year. That's why the Bank Reconciliation page shows you the current financial year only. Of course, you cal see all the other Financial Years by clicking on the the Show All Statements text link.

Why is there already a statement?

When you first create your Beeswax Account both a Bank Account (Asset) and a Credit Card (Loan or Liability) account will be created for you. Both of these will also have Bank Statements created. Of course you may need to adjust the dates as it creates a statement for the month in which your account was created. So, say you created your Beeswax Account on the 14th of January, a statement will be created for the whole of January. That being from the 1st of January to the 31st of January. By the way, your Bank Accounts are created and managed under the Chart of Accounts area. Remember that your Bank Account is just an Asset Account and you manage it in the same way that you would all your other Transaction Accounts such as Income and Expense accounts.

Statements are Snapshots

Think of Bank Statements in Beeswax as a snapshot of all the transactions that exist within Beeswax for that Bank Account over the specific date range. Beeswax gives you a very clear visual representation of all your statements. You get to see at a glance which ones are reconciled and which ones are not. And more specifically if something becomes unreconciled later on down the track. For instance, you may reconcile certain transactions in a statement but sometimes things change ( I know they shouldn’t but in the real world they do) so it’s good to know when and where this change occurs. And this is where the reconciliation view in Beeswax really comes in handy.

Reconciled or not?

In the tradition of Beeswax’s simplistic Red light Green light approach, Green is good, Red is Bad. So when your Bank Statement is Reconciled the bar for that statement turns Green and when it is not it’s Red.

When you first enter the opening and closing balances as well as the corresponding start and end dates, you will find that the bar will turn red showing that the statement is Unreconciled. Until you fully reconcile you Statement will it turn Green and show as Reconciled.

One of the key benefits of doing Bank Reconciliation this way is that you will see at a glance if something isn’t right. For instance is someone changes a payment for something in the past, it will throw the accounts out. When this occurs then this you'll see exactly which statement it occured in.

Let's look at each Role

Owner

AKA: The Boss

This is the Owner of the Account and more often than not they are also the Owner of the business. The business Owner should obviously see everything so of course they have Full Access to all parts of the application but importantly they are unique in that they are the ones who are responsible for managing the Beeswax Subscription and associated Plan.
It's likely they have a business partner or a dedicated senior staff member who needs to be able to see and do all the same things that the Owner can. That's what the Super
Admin Role which we get to next.

Super Admin

Business Partner or a Senior Employee

The Super Admin User also has Full Access to everything however they don’t have access to the Subscription but that’s all. These are usually Partners in the business or Senior Employees who need to see and control everything in the Business. Warts and all!

Manager

Production Manager or Account Manager

The Manager Role is generally the person who takes care of the day to day running of Projects, and oversees Tasks.
This Role would be for a Production Manager,  Studio Manager or Account Manager for instance.
They generally don’t get involved in Payroll financial reports and as such are not expected to know anything about Accounting or Tax related matters.

Of course these things aren’t necessarily that difficult to understand, however,  so as to avoid the potential pitfalls associated with incorrectly allocated transaction Accounts and / or Taxes we have chosen to limit this Users access and control over such things.
So, while Manager can create Quotes, Expenses and  Invoices, they can’t change the Transaction Account and Tax when working on any of these documents. While Managers can create Quotes, Expenses and  Invoices, they can’t change the Transaction Account allocation nor the Tax Allocation when the are preparing any

These are defined by the Items that make up these documents and are therefore meant to be set up specifically by someone with this knowledge such as your Bookkeeper or Accountant.

Accountant

Your Accountant (obviously) or your Bookkeeper

This Accountant Role is obviously for the Accountant or Bookkeeper who need access to all things Money. They essentially have full access to the entire system with the exception of being able to manage the subscription.

Basic

A User who primarily works on Tasks

This Accountant Role is obviously for the Accountant or Bookkeeper who need access to all things Money. They essentially have full access to the entire system with the exception of being able to manage the subscription.

Contractor

External Resource

This is someone who usually is a freelancer that needs access to Tasks but not much more. They have a similar level of access as the Basic User but we've included this for future use.

Client

The Client

Someone who probably would like to get access to all your stuff but really you only want them to see things you want them to see. Like outstanding invoices and access to Files you share with them but apart from this you don't really need much more.

Roles
Owner
Super Admin
Accountant
Manager
Basic
Contractor
Client

Dashboard

Projects

Companies & People

Companies

The businesses you work with every day

Contacts

Just like the ones in your phone only it's for everyone in your business

Users

Users are those people you wish to invite into your account to do something

Money

Items

The Services you Sell or the things you Buy

Templates

Templates will save you heaps of time

Bank Reconciliation

Bank reconciliation or statement check

Bank Import

Import your Bank CSV file to allocate transactions

Scheduled

Used to automate the generation and sending of regular invoices

Bank Transfers

Move money from one bank account to another

Manual Journal

Need to fudge something. That's the only reason you should be here

Chart of Accounts

The heart of any accounting system

Reports

Reports

Reports...the ones you need and non you don't

Who Owes Me

See at a glance your Accounts Receivables

What I Owe

Your Accounts Payable Report

General Ledger

The report you accountant needs

Profit & Loss

Perhaps the most important report for any business

Tax Report

Yeah...no getting out of it

Time

Logging time is easy in Beeswax

Statement

A list of all outstanding Invoices

Subscription

Subscription

Manage your Plan under the Subscription page

Overview

Companies exist for two main reasons:

  • Assigning Projects & other related things
  • Grouping Contacts and Users

1. Assigning – Projects and other related things

Projects

Quotes

Expenses

Most things in Beeswax, like Projects, Quotes or Invoices, need to be assigned to a Company. These things can’t be assigned to a specific User or Contact.

Why? Because small businesses, those businesses that Beeswax is specifically built for, generally work with and provide services to other businesses rather than individuals or customers. In other words, we think of Beeswax as being a B2B application rather than a B2C. It’s one of the key assumptions we’ve made when building Beeswax.

Remember a Quote or Invoice is technically a legal document that relates to the obligations that your business has to another party. And therefore the name of the other party, which is usually a business, should be stated specifically. Of course you will have a contact who will receive documents from you but they are still technically representing the third party and are usually not themselves obligated to fulfil their financial obligations to pay you.
It’s the company or business they represent. When they leave the company still owes you money.However, while we think of these entities as Companies, it’s not to say that a Company can’t be something else. That’s for you to decide.In any case just remember that Projects, Invoices, Quotes and Expenses are all allocated to this idea, this entity, this concept, that we call a Company.

2. Grouping Contacts & Users

SM

JC

DJ

JC

It’s the way Beeswax groups or organises Users and Contacts. We think it makes sense to keep all Users and Contacts under the specific Company that they are associated with.