Bank reconciliation in Business Central: from hours to minutes

If your month-end still means exporting the bank statement to Excel and ticking lines off by hand, Business Central can take much of that work away. This guide explains the tools it provides and how to get the most from them.

Key PointThe aim is to review the exceptions, not every line. Let Business Central match what it can, then spend your time on what is left.

Why reconciliation takes so long

Manual reconciliation is slow for three reasons:

• statements arrive in different formats;
• the bank and your ledger describe the same transaction differently;
• one mismatch can mean scrolling through hundreds of lines to find it.

Multiply that across several accounts and companies, and a quick check becomes a long job.

Getting the statement in

Microsoft's guide to reconciling bank accounts describes two ways to fill the bank statement lines:

• Import Bank Statement loads transactions from a file or a bank feed. For CSV files, the Set up a bank statement file format assisted setup defines the layout once and attaches it to the bank account.
• Suggest Lines fills the lines from entries in Business Central with outstanding payments.

Once the file format is set up, each statement imports in the same layout, with no reformatting in Excel.

Pro TipSet up the bank statement file format once per bank account. Every later import then lands in the right columns.

Matching: automatic, Copilot and manual

Business Central offers three ways to match statement lines to ledger entries:

• Match Automatically matches on text, with a date tolerance you can set. Matched lines turn bold green.
• Reconcile with Copilot runs after the automatic match and looks at what is left, using dates, amounts and descriptions. It can match one lump-sum payment to several invoices. Microsoft's Copilot reconciliation guide covers it, including the review step: nothing is saved until you choose to keep the proposals.
• Match Manually links lines you select in both panes.

Lines with no ledger entry, such as bank fees or interest, can go straight to a general journal with Transfer to General Journal. Copilot can also suggest a G/L account for those lines.

Posting and checking

Run the Test Report before you post to preview the reconciliation. You cannot post a reconciliation while lines still show a difference.

Microsoft also warns against direct posting to the G/L account behind a bank account, which breaks the link between bank and general ledger entries. This often happens when an opening balance is entered.

Watch OutDo not post opening balances directly to the G/L account behind a bank account. It breaks the link that reconciliation relies on.

Keep the records

Bank statements are business records. HMRC's VAT record-keeping guidance lists bank statements among the records to keep, and says records should generally be kept for at least six years.

Next steps

We are also building a Bank Statement Importer and Smart Reconciliation extension. It is in development and not yet available; our apps page shows where it stands.

For more on Copilot in finance, read our Copilot for finance guide. For independent guidance on finance technology, see the ICAEW technology resources. To find where the hours go in your own Business Central setup, start with our free Business Central review.