How to Complete a Bank Account Reconciliation in Business Central

Bank account reconciliation is one of the most important month-end tasks in any finance team. It confirms that what your accounting system thinks is in the bank matches what the bank actually shows. Business Central has a dedicated Bank Account Reconciliation tool that streamlines this process considerably, but understanding the mechanics, the difference formula, and the common errors that trip teams up will make the process far smoother.

What Is a Bank Account Reconciliation?

A bank reconciliation compares your bank records (the bank statement) against your BC bank account ledger entries (what BC has recorded). The goal is to identify and resolve any differences - whether from timing (transactions not yet cleared), errors, or missing entries - until the two sides agree.

In BC, the reconciliation lives at Bank Account Reconciliation (search from the BC home screen). Each reconciliation is tied to a specific bank account and a specific statement date.

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Step-by-Step: Completing a Reconciliation

1. Create a New Bank Account Reconciliation

Navigate to Bank Account Reconciliations and select New. Choose the relevant bank account. BC will pre-populate the Balance Last Statement field from your last completed reconciliation for that specific bank account. This should match your prior closing balance on your prior bank statement.

Set the Statement Date to match your bank statement end date, and enter the Statement Ending Balance exactly as it appears on your bank statement.

2. Import or Enter Bank Statement Lines

You have four main options for getting your bank transactions into BC:

• Yodlee automated import - The Yodlee bank feed connection lets BC pull your bank statement data into the BC bank reconciliation module automatically.
• Manual import - Most banks export in CSV format. Use Import Bank Statement to pull the file in. BC maps the transactions to the bank statement lines section on the right-hand side of the reconciliation page. Reach out to our Stravis team to quickly set up your statement CSV mapping.
• Third-party import - Additional add-in applications can complete the same steps as the Yodlee feed from different integration providers.
• Manual entry - For low-volume accounts or where a file import is not available, you can type lines directly into the bank statement lines section.

3. Match Transactions

The reconciliation page is split into two sides:

• Left side - Bank Statement Lines (what the bank shows)
• Right side - BC Bank Ledger Entries (what BC has recorded)

On the Matching menu option, use Match Automatically to let BC attempt matching based on amount, date, and description. BC will mark matched pairs green. Review these carefully - auto-matching is good but not perfect, particularly where amounts match but documents differ.

If you have Copilot (Microsoft AI) enabled (BC 2023 Wave 2+), it will attempt to auto-suggest matches and even draft a description of unmatched items. Many of our current clients have found the Copilot AI matching to be very successful.

For unmatched items, select a ledger entry on the right side and the corresponding bank line on the left side, then choose Match Manually.

4. Handle Unmatched Items

Any remaining unmatched lines on either side represent a difference you need to resolve before posting. Common reasons include:

• Transactions recorded in BC but not yet cleared by the bank - outstanding cheques, in-transit deposits. These are legitimate timing differences and should remain unmatched until they clear.
• Errors on either side that need correction before proceeding.
• Transactions on the bank statement not recorded in BC - bank charges, interest, or missed entries. These need to be posted in BC then matched. Tip: select these entries on the bank statement side and click Transfer to General Journal on the menu. This carries the date, amount, and description across - you just need to code the expense G/L account and dimensions.

5. Understand the Difference Formula

The Difference field in BC is the key indicator of whether your reconciliation balances. The total difference must reach zero before you can post. The formula is:

Difference = Statement Ending Balance - (Balance Last Statement + Outstanding Entries + Total Matched Entries)

• Statement Ending Balance - the closing balance on your bank statement (entered manually)
• Balance Last Statement - the closing balance from your last completed reconciliation in BC
• Outstanding Entries - unmatched entries posted in BC not yet showing on the bank statement
• Total Matched Entries - the total of all matched transactions for the period

If the difference does not equal zero, the gap tells you exactly how much is unaccounted for. Work through unmatched items on both sides until it reaches zero.

6. Post the Reconciliation

Once Difference = 0, click Post. BC will mark all matched bank ledger entries as closed (reconciled), update the Balance Last Statement on the bank account card ready for next month, and generate a Posted Bank Account Reconciliation.

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Common Errors and How to Fix Them

I Posted an Incorrect Bank Account Reconciliation

Navigate to Posted Bank Statement List (also accessible from the bank account card). Open the relevant posted reconciliation and select Undo from the menu. This will undo the reconciliation and re-open all bank account ledger entries for rematching. Complete a new bank account reconciliation after this is done.

The total of the bank statement lines does not equal the statement ending balance

This means the sum of your bank statement lines plus the Balance Last Statement does not add up to the Statement Ending Balance entered. Check that a line is not missing from the import, the Statement Ending Balance was entered correctly, no line amount has been modified manually, and the Balance Last Statement matches your prior statement opening balance.

Difference is not zero but you cannot find the gap

Confirm the Statement Ending Balance matches your bank statement exactly - a single digit transposition will cause this. Check the Balance Last Statement matches your prior reconciliation closing balance. Look for duplicate entries - the same transaction matched twice or entered twice in BC. Check for entries posted to the wrong bank account in BC.

A bank ledger entry I expect to see is not appearing

The entry may have already been reconciled in a previous period (marked as closed), or posted to a different bank account. Use the Bank Account Ledger Entries page, filter by the account, and look for the entry directly. It may also be marked as matched on another unposted open bank account reconciliation.

Opening Balance Does Not Match Prior Statement

If your Balance Last Statement in BC does not match last month closing balance, someone has likely posted an entry to the bank ledger in a prior period after it was already reconciled, a prior reconciliation was completed with an incorrect Statement Ending Balance, or a prior reconciliation was deleted. Trace back through bank ledger entries by date to find what changed.

Foreign Currency Transactions

If your bank account is in a foreign currency, BC will show the bank account ledger entries as the foreign currency value they were posted in. This should match what you see on the bank statement.

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Tips for a Cleaner Reconciliation Process

• Reconcile monthly at minimum. The longer you leave it, the harder it is to trace discrepancies.
• Keep bank charges and interest coded consistently so they are easy to identify each month.
• If using the Payment Reconciliation Journal for high-volume transactions such as credit cards, complete those first so the entries feed into the bank reconciliation cleanly. Use the post option, not post and reconcile.
• Enable Copilot if you are on a current BC version. It will not replace judgment but significantly speeds up the matching step.