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?:
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.
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.
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.
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.
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.
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.
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.