Keeping accurate financial records is critical for any business, but reconciling accounts can be a tedious and confusing process.
Luckily, Bill.com offers a dedicated reconciliation tool that makes matching transactions and identifying discrepancies a breeze.
In this post, you'll learn step-by-step how to use Bill.com to reconcile your accounts, ensure accuracy in your books, and master the entire reconciliation process.
Introduction to Reconciling Accounts in Bill.com
Reconciling accounts in Bill.com is an important process to ensure accuracy in your books. Regularly reconciling clears up any discrepancies between your Bill.com account and your accounting system. This maintains reliable financial reporting so you can make sound business decisions based on up-to-date information.
Some key benefits of reconciling Bill.com accounts include:
- Identifies and resolves any sync errors from Bill.com so your books stay accurate
- Catches and corrects any incorrectly accounted for cleared transactions
- Keeps your Bank to book reconciliation up-to-date each period
- Provides transparency into expenses and vendor payments
- Enables accurate financial statements and reporting metrics
Understanding the Role of Bill.com in Account Management
Account reconciliation is the process of comparing transactions from two sources, identifying any discrepancies, and resolving those differences. For Bill.com, it involves syncing the cleared payments from your Bill.com account with the activity recorded in your accounting software.
Reconciling on a regular basis is crucial because errors and syncing problems can occur over time. Even small discrepancies can throw off your financial reporting. Staying on top of reconciliation ensures reliable and accurate books so you can monitor the true financial health of your business.
The Importance of Ensuring Accuracy in Your Books
There are a few key reasons why reconciling Bill.com regularly is critical:
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Maintains accurate records: Reconciling catches any sync errors from Bill.com so you can correct them before they compound. This ensures transactions are recorded properly.
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Updates account balances: By reconciling, you incorporate the latest cleared Bill.com payments into your accounting system. Account balances stay current.
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Enables reliable reporting: With accurate, up-to-date transactions, you can pull reliable financial statements and reports to monitor performance. Metrics will be correct.
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Improves transparency: Reconciliation provides visibility into vendor expenses and payments. You can see where money is going out.
Making reconciliation part of your monthly close process is essential for ensuring accuracy in your books. This prevents small errors from accumulating into larger problems. Overall, regularly reconciling Bill.com provides assurance that your financial data is precise and dependable.
How do you reconcile books of accounts?
Reconciling your books of accounts is an important process to ensure accuracy in your financial records. Here are the key steps to take:
Check That the Opening Balances Agree
- Compare your opening account balances in Bill.com to the closing balances from the prior period. Verify that they match. If not, determine the source of the discrepancy.
Record Any Differences
- If you find differences between the opening balances, record adjusting entries to true up the accounts. These could relate to transactions that cleared after closing or sync errors.
Mark Off New Activity
- Review new transactions on your bank statement and tick them off in Bill.com as you verify each entry. This will identify uncleared items.
Review and Create Reports
- After marking all cleared transactions, examine remaining uncleared items. Produce and analyze reconciliation reports in Bill.com to pinpoint any lingering discrepancies.
Make Correcting Entries
- For any remaining discrepancies that are not timing-related, create correcting journal entries. Common reasons include duplicate payments or incorrectly categorized transactions.
Following this reconciliation process ensures that your Bill.com general ledger stays accurate over time. Letting errors accumulate can distort financial statements. So regular account reconciliation is essential for reliable books and reporting.
How do you demonstrate accurate bank reconciliation?
To demonstrate accurate bank reconciliation, follow these key steps:
Gather Required Documents
First, gather the following documents:
- Most recent bank statement
- General ledger showing cash account balances
- List of outstanding checks not yet cleared by the bank
- List of deposits made but not yet showing on the bank statement
Reconcile the Bank Statement
Next, reconcile the bank statement by:
- Starting with the ending balance shown on the bank statement
- Adding any deposits in transit that have not yet cleared
- Subtracting any outstanding checks or payments not yet processed by the bank
This provides you with the true adjusted cash balance that should match company records.
Compare with Company Records
Finally, compare the adjusted cash balance from the bank reconciliation to the ending cash balance shown in the company's general ledger.
If these two balances match, congratulations - your cash accounts have been successfully reconciled! If they do not match, further research is required to locate the discrepancies.
Following this clear bank reconciliation process each month demonstrates financial accountability and accuracy in your books. Let me know if you have any other questions!
How would you ensure accuracy when performing account reconciliation?
Reconciling your accounts is a critical process to ensure the accuracy of your financial records. Here are 5 best practices to enhance your reconciliation process:
Standardize Reconciliation Workflows
Create standardized procedures for reconciling each account type. Document the required steps, data sources, supporting documents, and approval protocols. Standardized workflows promote consistency, efficiency and accuracy.
Automate What You Can
Identify manual reconciliation tasks that can be automated through accounting software like Bill.com. Automating repetitive tasks reduces human error from manual data entry or calculations.
Perform Timely Reconciliations
Don't let reconciliations pile up. Reconcile accounts frequently, such as weekly or monthly. Timely reconciliations make discrepancies easier to research and resolve.
Implement System Controls
Configure system controls to restrict access, require secondary approval for changes, and create an audit trail. Preventing unauthorized changes enhances data integrity.
Continuously Optimize
Regularly evaluate workflows to identify reconciliation bottlenecks. Implement process improvements to increase efficiency. Continual optimization enhances accuracy through best practices.
Following these 5 best practices will help ensure your account reconciliations are accurate, efficient, and secure. Standardizing procedures, automating tasks, performing timely reconciliations, implementing system controls, and continuously optimizing processes work together to enhance reconciliation accuracy.
What are the most common methods of reconciling expense accounts?
The most common methods for reconciling expense accounts include:
Documentation Review
This involves reviewing the detailed transactions in an account and validating that each transaction is accurate and properly recorded. This typically includes:
- Calling up account details from statements
- Reviewing each transaction line by line
- Verifying appropriate categorization and posting
- Confirming amounts match actual expenses
- Identifying any discrepancies or questionable transactions
Bank Reconciliation
This involves reconciling the expense account balance to the balance shown in the bank statement. It includes:
- Matching cleared checks and payments to transactions
- Comparing statement and account balances
- Identifying outstanding or missing transactions
- Determining causes of any discrepancies
Audit Sampling
This statistical sampling technique can provide assurance over the accuracy of large volumes of transactions. It involves:
- Selecting a random sample of transactions
- Vouching the sample transactions to source documents
- Gaining reasonable assurance of the population accuracy
- Extrapolating error rates
Regular reconciliation through documentation review or sampling is key to ensuring expense accounts reflect actual spending and prevent fraud. Reconciling to bank statements also verifies cash basis accuracy.
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Preparing for Reconciliation in Bill.com
Reconciling your accounts in Bill.com is an important process to ensure accuracy in your books. Here are some key steps to prepare:
Setting Up the Bill.com Clearing Account in QuickBooks Online
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Create a dedicated bank account in QuickBooks Online called "Bill.com Money Out Clearing". This will be used to track payments made through Bill.com before they clear your bank.
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Set this clearing account up as a bank account linked to your operating bank account. This enables easy transfer of cleared funds.
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When setting up rules in Bill.com, select this clearing account to record the transactions in.
Understanding the Bill.com Money Out Clearing Process
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When you pay a bill in Bill.com, the payment is deducted from your Bill.com balance and recorded in the clearing account.
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Once the payment clears your bank after a few days, you need to reconcile it, which transfers the transaction from the clearing account to your operating bank account.
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This process matches what happens in your actual bank accounts, avoiding duplication of transactions.
Navigating the Bill.com Interface for Account Reconciliation
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Bill.com provides a reconciliation tool that syncs with your connected QuickBooks Online account.
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You can access transaction details and make reconciling adjustments right within your Bill.com account.
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Key tools include the reconciliation history, payment register, account registers, and sync errors features.
Bank to Book Reconciliation Formula
The key formula to remember when reconciling between your bank and book accounts is:
Bank Statement Ending Balance = QuickBooks Ending Balance + Outstanding Deposits - Outstanding Checks
You need to take into account pending activity that has not yet cleared at the bank. This allows you to accurately match what has cleared between Bill.com and your bank account.
Following these steps will enable effective reconciliation management within Bill.com to ensure your financial records remain accurate.
Executing the Reconciliation Process
Accessing the Bill.com Reconciliation Tool
The Bill.com reconciliation tool allows you to compare your recorded transactions in Bill.com with your bank/credit card statements. To access it, log into your Bill.com account and click on "Reconcile" in the top menu bar. This will open up the reconciliation module.
Select the appropriate bank/credit card account you wish to reconcile. You can reconcile accounts individually or reconcile multiple accounts at once.
Matching Bill.com Transactions with Bank Records
In the reconciliation module, you will see a list of transactions from both your Bill.com account and bank/CC statements, with an option to "Match" identical transactions.
Carefully review each transaction and click "Match" when you find a Bill.com transaction that exists on your bank/credit card statement for the same amount. Matched transactions will be highlighted in green.
You want to match as many transactions as possible. Make sure to scroll through the entire list.
Identifying and Researching Discrepancies
After matching all identical transactions, you may still have some unmatched transactions on either side. These are discrepancies that need to be researched.
Common discrepancies include:
- Missing transactions - it exists on one side but not the other
- Amount differences - the transaction amounts don't match
- Duplicate transactions - it is recorded twice on one side
- Misclassified transactions - it is categorized incorrectly
For each unmatched transaction, you need to investigate why the discrepancy exists. Refer to your bank records, receipts, invoices, etc. Understanding the underlying cause is crucial for recording any necessary adjustments or corrections.
Recording Adjustments for Unmatched Transactions
Once you determine the reason behind unmatched transactions, you may need to record some adjustments. Common adjustment scenarios include:
- Recording a missing transaction that only exists on the bank/CC statement
- Deleting or adjusting a duplicate Bill.com transaction
- Reclassifying a Bill.com transaction that was categorized to the wrong account
- Entering an adjustment transaction to correct an amount difference
To enter an adjustment transaction, click "Add Adjustment" and fill in the appropriate transaction details.
Adjustments will be marked with an "A" to indicate they were created during reconciliation.
Finalizing Reconciliation and Ensuring Accuracy
After researching discrepancies and entering applicable adjustments, verify that the Amount Difference at the bottom of the reconciliation module reads "$0.00".
Review matched and unmatched transactions one final time to ensure accuracy. Then click "Reconcile" to complete the reconciliation process.
This locks down the reconciliation and posts adjustment transactions for reporting. Finally, confirm the date all transactions are reconciled through.
Reconciling on a regular basis prevents small inaccuracies from accumulating into larger issues. It also provides certainty that your books are error-free and up to date.
Advanced Accounting Techniques for Reconciliation
Reconciling your Bill.com account accurately is crucial for ensuring your books are in order. By following some key accounting best practices around bank reconciliation statements, you can streamline the process.
Applying Bank Reconciliation Statement Rules
When creating a bank reconciliation statement in Bill.com, be sure to follow these rules:
- Match cleared transactions in Bill.com to your bank statement entries one-by-one. This ensures no discrepancies are missed.
- Record any bank fees, services charges, or interest earned as individual transactions. These should be matched as well.
- Note any deposits in transit or outstanding checks not yet cleared by the bank. These will need to be accounted for.
- Investigate and determine reasons for any unmatched cleared transactions. These could indicate duplicate entries or sync errors.
Utilizing the Correct Bank Reconciliation Statement Format
The proper format for reconciliation statements includes:
- The ending bank statement balance, serving as the starting point.
- Plus deposits in transit, or money received by the business but not yet processed by the bank.
- Minus outstanding checks, or pending payments not yet cleared from the account.
- Plus or minus any discrepancies, errors, or omissions that need to be corrected.
- Equals the adjusted ending book balance that matches the true cash position.
This standardized format provides consistency and clarity around actual vs. reported cash balances.
Correcting an Incorrectly Accounted for Cleared Transaction
If you notice a transaction that cleared the bank but was not properly recorded in Bill.com, follow these steps:
- Create a new Expense or Deposit transaction in Bill.com to represent the incorrectly accounted for bank transaction.
- Properly categorize the new transaction to match what actually occurred.
- Add a note explaining that this entry corrects a previously cleared transaction that was not properly accounted for.
- The reconciled balance should now match after correcting the omission.
Managing Sync Errors from Bill.com to Accounting Software
If transactions fail to sync properly from Bill.com to your accounting software, take these steps:
- Review integration logs for details on specific sync failures.
- Retry the sync after ensuring connectivity between Bill.com and the accounting software.
- For persistent issues, create matching manual journal entries in the accounting software to record problematic Bill.com transactions until the root cause is resolved.
Staying on top of sync errors will help avoid data discrepancies or missing transactions across systems.
Best Practices for Reconciling Expenses and Vendors
Reconciling expenses and vendor accounts regularly is crucial for ensuring accuracy in your books. Here are some best practices:
Automating Reconciliation with Banking Feeds
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Link your Bill.com account to bank feeds to automatically match transactions from your bank account. This eliminates manual data entry and reduces human error.
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Set rules to categorize transactions, making reconciliation faster. For example, tag all transactions from a specific vendor to their account.
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Review automatically matched transactions weekly. Correct any errors immediately before they compound.
Regular Reconciliation for Expenses and Vendors
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Reconcile accounts at least monthly. Weekly is better for high volume accounts. This catches any unmatched transactions.
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Follow the standard reconciliation process:
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Compare your recorded balances to the source documents like bank statements.
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Research discrepancies and create journal entries to correct errors.
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Review final balances and transaction details.
Reviewing Reconciliation Reports for Accuracy
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Use the Reconciliation Reports in Bill.com to review status. The Unreconciled Transactions report shows unmatched items needing review.
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Check the corrected Cleared Balance against your bank statement balance to confirm accuracy.
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Review the Reconciliation History and Details reports to catch past reconciliation errors.
Organizational Tips for Efficient Reconciliation
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Categorize expenses with tags like "office supplies" or "software". Apply rules to auto-tag recurring transactions.
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Use file cabinets to store documents. Name cabinets by vendor or expense type for easy lookup during reconciliation.
Automating what you can and establishing routines streamlines reconciliation. But regularly reviewing reports and statements is still essential to ensure accuracy in your books.
Troubleshooting Common Reconciliation Challenges
Reconciling transactions between Bill.com and other accounting systems can sometimes result in errors or sync issues. Here are some common challenges and potential solutions:
Addressing Transactions Not Matching in Reconciliation
There are a few reasons why transactions may fail to match between systems during reconciliation:
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Timing differences - A transaction may have cleared in one system but not the other if there is a delay in syncing. Wait 1-2 days for records to fully sync.
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Categorization differences - The same transaction may be coded differently in each system. Carefully review and match the vendor, amount, and date to identify mismatches.
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Duplicate transactions - A duplicate entry in one system can prevent transactions from matching. Look for and remove any duplicates.
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Incorrect data entry - Typos in the vendor name or amount when entering transactions can lead to a mismatch. Double check data entry in both systems.
Resolving Missing or Duplicate Transactions
If transactions seem to be missing or duplicated between systems:
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Confirm bank feeds and account connections are still active in Bill.com without errors. Reconnect if needed.
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Review reconciliation reports for missing references or duplicate transaction IDs.
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Check if the transaction is showing in the wrong account in one of the systems.
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For persistent issues, contact Bill.com support for troubleshooting assistance.
Fixing Sync Errors Between Bill.com and Accounting Platforms
If direct syncs between Bill.com and accounting software are failing:
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Check for connectivity errors in the connections tab of Bill.com and reauthorize if needed.
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Review any pending updates to accounting platforms that may disrupt syncs.
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Clear cache and cookies in the browser used to connect Bill.com.
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Try disconnecting and re-establishing the integration.
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As a last resort, export transactions to CSV from Bill.com and import manually.
Reaching out to Bill.com support can also help diagnose and resolve persistent sync errors between systems.
Conclusion: Mastery of Reconciliation in Bill.com
Reconciling your Bill.com accounts regularly is crucial for ensuring accuracy in your books. By taking the time to carefully compare your recorded transactions, bank statements, and Bill.com reports, you can catch any discrepancies or issues early. This allows you to correct any mistakes before they compound into bigger problems.
Some key takeaways for successful Bill.com reconciliation include:
Summarizing Key Takeaways for Account Reconciliation
- Review Bill.com reports weekly or monthly and compare to your accounting system. Look for any missing or duplicated transactions.
- If you find sync errors or discrepancies, work to identify the root cause. Contact Bill.com support if needed.
- Reconcile clearing accounts often to ensure money in and money out match up properly over time.
- Follow proper reconciliation procedures of matching dates, amounts, transaction types, etc.
- Communicate issues or discrepancies to relevant finance team members.
- Stay organized with notes on any problem transactions that require follow up.
By putting these Bill.com account reconciliation best practices into action, you can achieve confidence that your books are error-free and transactions are processing accurately between systems. This level of care and oversight is essential for any business managing financials and accounting in Bill.com. Consistent reconciliation work leads to quality books you can count on.
