Dynamics GP Bank Reconciliation | Step by Step

Any organization must ensure that the balances on the sheet correspond to the actual transactions. To make sure that the transactions in accounting records correspond to the appropriate entries in its bank statements, many businesses use Dynamics GP bank reconciliation feature.

Microsoft Dynamics GP's bank reconciliation feature helps businesses to streamline their finances in an efficient and accurate way. This helps businesses to maintain financial integrity, improve cash flow management, detect fraud, identify errors, and many more.

In this article, we’ll explore the essentials of bank reconciliation in Dynamics GP, its benefits, and the reconciliation process. 

What Is Bank Reconciliation in Dynamics GP?

Businesses can check and manage their cash accounts and bank statements using the Dynamics GP bank reconciliation. This allows you to minimize inconsistencies and improve financial accuracy by ensuring that the transactions, such as deposits, payments, and bank fees, are entered into Dynamics GP as per the bank’s records.

Microsoft Dynamics GP, or Great Plains financial statements, give you transparency and control over cash flow by allowing you to manage pending transactions, reconcile numerous bank accounts, and create comprehensive reports.

In addition to this, you can use the Dynamics GP electronic bank reconciliation feature to eliminate the manual tasks, such as data entry and manually checking and ticking off checks and deposits. This enables automatic matching, deposit date tolerance, automatic deposit flow, and transaction tracking.

Moreover, the Dynamics GP undo bank reconciliation feature helps you change the transactions in the reconciliation to not reconciled. You can also remove the reconciliation from history and update the Checkbook Master.

How to Do Bank Reconciliation in Dynamics GP?

In this section, we will explore the step-by-step process of reconciling your bank accounts with Dynamics GP. Let’s explore them:

Set Up Bank Accounts

Before you start, ensure all your bank accounts are set up in Dynamics GP. Navigate to Cards > Financial > Checkbook to add or update checkbook details, including account numbers, bank information, and currency. 

Enter Bank Transactions

Record all bank-related transactions, such as deposits, withdrawals, and adjustments. Use the Transactions > Financial > Bank Transactions menu to input data accurately. 

Access the Bank Reconciliation Module

Go to Transactions > Financial > Reconcile Bank Statements. Select the appropriate checkbook ID for the account you want to reconcile. 

Enter Statement Information

Input details from your bank statement, such as the ending balance, statement ending date, and any additional information required. 

Match Transactions

Dynamics GP allows you to match transactions from your records to those on the bank statement automatically or manually. Use the Select Transactions option to automatically match transactions within a defined date range. Match unmatched transactions manually by reviewing each entry. 

Address Discrepancies

Identify and resolve any discrepancies to ensure accuracy. Look for missing or duplicate transactions. Adjust records for bank fees, NSF checks, or errors. 

Finalize Reconciliation 

Once all transactions are matched and discrepancies are addressed, reconcile the account. Dynamics GP will mark the account as balanced if the difference is zero. 

Generate Reports 

Generate reconciliation reports for review and record-keeping. Navigate to Reports > Financial > Bank Reconciliation to create detailed summaries or transaction-level reports.

Exploring the Key Components of Bank Reconciliation

Bank Transactions: These comprise modifications for rises (like interest income) or falls (like service fees) you want to exercise. Instead of going via AP or AR, you can import bank transactions into Dynamics GP from the existing transactions such as pre-authorized debits, lease payments, and service fees.

Bank Transfers: Money is moved between bank accounts through bank transfers. Both accounts are impacted by these transactions at the same time, and their reconciliations show increases and declines. These show up as a single entry in the GL.Transfers are aware of many currencies and, if necessary, compensate for fluctuations in exchange rates.

Deposit Entries: Deposits are created to consolidate individual checks into a single bank deposit. This simplifies reconciliation, as the bank statement will show a single line item for each deposit. For instance, 15 checks deposited together will appear as one deposit in your statement.

Miscellaneous Payments and Checks: These allow for direct printing of checks without linking to a vendor. While flexible, they are limited to the functional currency of the organization.

Transactions in Dynamics GP

In Dynamics GP, transactions flow from multiple areas, but the most common sources are Accounts Payable (AP) and Accounts Receivable (AR). Here's a deeper dive into each:

Accounts Payable (AP)

This module records all payments, including manual checks, purchase order deposits, and scheduled check runs. Transactions automatically post to the checkbook, ensuring that the Dynamics GP bank reconciliation captures all issued payments.

Check Issuance and Reconciliation: 

Each check is entered individually into the checkbook to enable precise reconciliation. Cleared checks are marked off manually or electronically during the reconciliation process. 

Voids and Adjustments: 

Voided checks are removed from the bank reconciliation, but care must be taken with transaction dates. For instance, backdating a check in the checkbook without updating the General Ledger (GL) posting date may cause discrepancies between the bank reconciliation and the GL.

Accounts Receivable (AR)

On the AR side, transactions often originate from cash receipts and sales order processing (SOP). These are handled as follows: 

Cash Receipts:

Cash receipts flow into deposits, which then aggregate to form a single deposit for bank reconciliation.

Batch Posting:

Dynamics GP provides a toggle to post an entire batch of transactions as a summary, simplifying reconciliation. For example, daily deposits from multiple checks can be summarized into one entry that matches the bank's record.

The Role of the Chart of Accounts in Bank Reconciliation

The Microsoft Dynamics GP chart of accounts is vital for the reconciliation process. You can organize and categorize all financial transactions to ensure that each transaction is accurately recorded and easily traceable. Here’s how it contributes to bank reconciliation:

Account Mapping: With the Dynamics GP import chart of accounts, you can precisely map the transactions to the correct accounts. This ensures that all bank transactions, such as deposits, withdrawals, and fees, are recorded in the appropriate general ledger accounts.

Transaction Tracking: Dynamics GP import chart of accounts allows you to track all financial transactions meticulously. During the reconciliation of the bank statement with the company's financial records, tracking helps you identify and resolve discrepancies.

Reconciliation Accuracy: A well-organized Dynamics GP mass-modified chart of accounts helps in identifying inconsistencies between the bank statement and the company's books. This accuracy is vital for ensuring that the reconciliation process is smooth and error-free.

Benefits of Bank Reconciliation in Dynamics GP

Using Dynamics GP for bank reconciliation can provide you with several benefits, like data consistency by automatically reconciling from the transaction.

Enhanced Accuracy

You can identify discrepancies like missing entries, duplicate transactions, or bank errors using the Dynamics GP bank reconciliation feature to ensure that your financial data is accurate. 

Streamlined Process

Dynamics GP automates much of the reconciliation process, which saves time and reduces manual effort. 

Better Cash Flow Management

Accurate bank reconciliations provide a clearer picture of cash flow, enabling better financial decision-making. 

Detailed Reporting

Generate comprehensive reports to analyze discrepancies, monitor transactions, and maintain a robust audit trail. 

Multi-Currency Support

Dynamics GP supports reconciliation for accounts in multiple currencies, making it ideal for global businesses.

Steps to Complete Bank Reconciliation

Before moving to the reconciliation process in Dynamics GP, you need to take a few things into account to ensure a successful bank reconciliation.

Deposit Creation

Deposits are created to clear transactions from the outstanding list, matching the bank statement's entries. Cleared checks and deposits are marked off, leaving only outstanding items.

Transaction Entry

Regular entries are made directly in the bank module, such as pre-authorized debits, service fees, and rent payments. Based on accounting activities, these are classified as either revenue or costs.

Transfers

To shift money between accounts, use the transfer feature. In multicurrency transactions, this guarantees that both accounts stay balanced.

Miscellaneous Payments

You can issue checks straight from the bank module for miscellaneous payments. These are perfect for sporadic payments that aren't connected to suppliers.

Reconciling Entries

Items from the bank statement are checked off using the bank reconciliation feature. This includes loans, deposits, and checks. 

The difference between cleared and outstanding transactions is displayed at the bottom of the reconciliation screen. Once the balance reaches zero, reconciliation can be finalized. 

Adjusting Entries

Adjustments can be made for discrepancies between bank and GP records. For example, an outstanding check not reflected on the bank statement may require a timing adjustment. 

The adjusted bank balance should match the adjusted book balance, ensuring alignment between the bank reconciliation and GL.

 How Can Dynamics Square Help?

Dynamics Square is a leading Microsoft Solutions Partner in Ontario with decades of experience in offering Microsoft solutions. We have a team of 135+ experts that are well-versed in Dynamics GP, enabling you to automate, ensure accuracy, and robustly report.

In case of any unexpected error during Dynamics GP bank reconciliation, you can get in touch with our expert at +1 289 807 0740 or write an email at info@dynamicssquare.ca to get assistance.