Improvements to Bank Reconciliation in the North American Versions


Optimization of the processes for payment registration and bank reconciliation has been a focus area in recent releases of Microsoft Dynamics NAV. We have improved the capabilities for handling electronic payments and bank statement import substantially in the generic version of the product.

NAV 2013 R2 enabled basic cash management with enhanced electronic payment integration focused on SEPA credit transfers and SEPA bank statement import. It also enhanced the usability of the bank reconciliation process with a new and more intuitive user interface.

NAV 2015 further enhances the electronic payment and payment reconciliation capabilities by adding more bank formats through the Bank Data Conversion Service feature and simplifying payment reconciliation further by importing bank statement files and automatically applying payments to their related open entries on the new Payment Reconciliation Journal page.

These improvements also enhance the usage of electronic banking features in local versions that do not follow the SEPA standard, such as US, Mexico, and Canada. With Microsoft Dynamics NAV 2015, customers and partners in North America can choose to use either the existing, North American Bank Rec. Worksheet feature for manual processes or the new, generic Bank Acc. Reconciliation feature that provides statement file import and automatic matching.

We recommend that our customers and partners in the above markets investigate the two different features and choose the one that fits their needs. To help decide, this document highlights the differences between the two and describes how to make the change. It is very simple to start using the new feature, but it is important that you do so based on a conscious decision.

Benefits of the New, Generic Bank Reconciliation Feature

To give a better understanding of the benefits of using the new capabilities, this document will walk through the differences in the process and show how the new pages support a more efficient cash management flow in many scenarios.

Benefit: Import of bank statement data combined with automatic matching against posted bank ledger entries eliminates trivial, repetitive, and time-consuming tasks. Combined with a new and more intuitive user interface, the feature makes bank account reconciliation fast and easy to do.

Benefit: The user interface on the Bank Acc. Reconciliation page is simpler and provides a good way to get an overview. Filtering and sorting on the bank ledger entries ensure that the controller is able to identify the entries more efficiently. Note that there are efficiency gains in using the generic Bank Acc. Reconciliation feature even if the process does not involve bank file import. The simplified UI will make the bank reconciliation process simpler and less error-prone.

Benefit: Adding the capabilities of the Payment Reconciliation Journal page, such as importing and automatically reconciling payments with related open entries, will lead to increased efficiency in the payment registration process, which in turn makes it easier to stay up to date with the company’s cash situation. In addition, good and accurate control of the payment registrations makes the periodic bank reconciliation process easier.

For more information about the Bank Acc. Reconciliation feature, which was released with Microsoft Dynamics NAV 2013 R2, see, for example, the How to: Match Bank Statement Lines with Bank Account Ledger Entries topic in Application Help on MSDN. For more information about Bank Reconciliation features in Microsoft Dynamics NAV 2015, see, for example, Microsoft Dynamics NAV 2015 Readiness Library.

Differences from the North American Bank Reconciliation Feature

Historically, North America, Mexico, and Canada have different requirements for registration of payments and bank account reconciliation than what is required in other countries/regions. The North American bank account reconciliation process has extensive use of checks and deposits as well as a tight relationship with general ledger entries. Therefore, import of electronic bank statements was not implemented in NAV 2013 R2 North America, nor was the export of payment files implemented due to the limitation to SEPA formats, an EU standard. With the new, generic capabilities for electronic payments and bank statement import, it is time to give access to all the new features.

To be specific, we are comparing two different pages and the processes that they support:

  • In Microsoft Dynamics NAV 2013 R2 North America: The Bank Rec. Worksheet page (10120), hereafter referred to as “NA Bank Rec. feature”
  • In Microsoft Dynamics NAV 2015 W1 (the generic version): The Bank Acc. Reconciliation page (379), hereafter referred to as “Bank Recon. with Auto. Match feature”

Both the NA Bank Rec. feature and the Bank Recon. With Auto. Match feature compare the open payments registered per bank account in the system with the transactions on the actual bank account.

To help the user compare the actual transactions, it now possible to import the bank statement as a file. This is only possible with the Bank Recon. With Auto. Match feature, but the paper-based process is possible with both pages. If there is no electronic bank statement to import, the reconciliation can be done by using a suggestion of lines.

For both pages, the registered payments are either generated automatically when documents are posted, or they are registered through the payment journal or cash receipt journal. In Dynamics NAV 2015, incoming and outgoing payments can also be registered through the Payment Reconciliation Journal page by first importing the bank statement file that represents the payments to your bank.

Summary of the NA Bank Rec. Feature

The NA Bank Rec. feature uses the registered payments as a suggestion to what transactions should be cleared in the system. This works well for the paper-based bank statement that the controller typically works with. Payments are categorized in three types: Transaction, Check, and Adjustment. Each line must be manually controlled and cleared, and any necessary adjustments must be created before the bank account reconciliation can be posted.

The Suggest Lines function generates a proposal of what should be cleared. Transactions that are not marked as cleared when the bank reconciliation is posted are considered outstanding and will appear on the next bank reconciliation worksheet.

Example:

In the example below, two check payments and one vendor payment are posted against the WWB-Transfer bank account.

The lines on the Bank Rec. Worksheet page are added when the users runs the Suggest Lines function. They are automatically divided into the Check pane and the Deposit/Transfer pane. The user must go through each line and clear the amount by using the Checkmark Clear function. They can also use the Mark Lines and Clear Line functions to do bulk edits. Required adjustments are entered in the Adjustment pane and will be posted to the general ledger.

After clearing the lines, the user must copy the sum identified in the three sub panes to the header as well as calculate the balance of the statement before posting. The feature then validates that the posting corresponds with the general ledger entries.

The main goal of the NA Bank Rec. feature is that registered payments in the system are manually cleared and that the bank reconciliation is posted with the same amounts as in the general ledger.

Summary of the Bank Recon. with Auto. Match Feature

The Bank Recon. With Auto. Match feature also uses the registered payments as a suggestion to the payments that should be cleared. (Note that this feature uses the term “match” instead of “clear”.) The actual statement lines can then be generated by either importing the bank statement file or by using the Suggest Lines function. It is possible to use the automatic matching engine to reconcile as many bank statement lines with bank ledger entries as possible and then manually do the rest.

Transactions that are not matched when the bank reconciliation is posted are considered outstanding and will appear on the next bank account reconciliation.

Example:

As in the example for the NA Bank Rec. feature, there are posted entries in the system, both checks, deposits, and vendor payments against the WWB-Transfer bank account. All open bank ledger entries are shown in the right pane of the Bank Acc. Reconciliation page.

The bank statement lines that must be reconciled can be imported directly as a bank statement file or they can be manually added by using the Suggest Lines function. The Match Automatically function enables the user to easily match payments.

If the user wants to focus only on check payments, it is simple to sort by the Check Ledger Entries field.

Any required adjustments are made by using Transfer to General Journal function for the entries where there is a difference between the statement amount and the bank ledger entry amount (the Difference field has a value).

The main goal of the Bank Recon. With Auto. Match feature is to register payments in the system, match them with bank statement lines, and then post the bank account reconciliation.

As illustrated by the two summaries, the same end result is reached with the two pages, but they differ concerning usability, the capability to import a bank statement file, and the automatic matching.

How to Match Against the General Ledger

One big difference between the two features is that the NA bank Rec. feature only allows posting if there is exact match against the G/L account. This rule is not enforced in the Bank Recon. with Auto. Match feature unless the bank account is set up for a 1-1 relationship with the G/L account. It will only look at the bank account ledger when validating the posting. To get the same behavior in the two features, ensure that the bank account is mapped to its own G/L account and not to a group.

How to Turn on the Bank Recon. with Auto. Match Feature

From the General ledger Setup page, it is possible to choose if the installation should use the Bank Recon. With Auto. Match feature or the existing NA Bank Rec. feature.

Since both of the bank reconciliation features use a report that is set up in the Report Selections table, a warning that the report will change appears when you change the Bank Recon. With Auto. Match check box. 

Note: For new installations of Dynamics NAV 2015, the Bank Recon. With Auto Match check box will be selected by default. For upgraded installations, the check box is not selected, meaning that the existing North American feature is used.

Note: When upgrading and changing to the Bank Recon. with Auto Match feature, the history created with NA Bank Rec. feature is stored and made available from the navigation pane.

The Bank Acc. Reconciliations page is the same for both features. If the Bank Recon. with Auto. Match check box is selected, the Bank Acc. Reconciliation page (379) opens when the users chooses New in the Bank Acc. Reconciliations page. If the check box is not selected, the Bank Rec. Worksheet page (10120) opens.

Depending on the Role Center, there will also be easy access to the relevant page through the Activities pane. For example, the Accounting Manager Role Center has a Bank Account Reconciliation to Post tile and an action to open a new bank account reconciliation.

For upgraded installations, there are several access points to historical posted bank account reconciliations. For example, the Bank Account Card page contains two actions, Statements for Bank Recon. with Auto. Match and Posted Reconciliations for NA Bank Rec.

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