Bank reconciliation process in SAP is based on the accounting entry passed through a Bank sub and main account. The process is dependent on the Bank Statement received from the Bank that will be entered into SAP.
Accounting rules are to be defined for each transaction type and posting rule for posting accounting entry as per statement. Bank statements to be uploaded into SAP.
Bank Main account balance is the actual balance as per the statement received whereas the sub accounts denote the reconciliation items. These sub accounts show those accounting entry, which will flow from the sub a/c which are not cleared in the bank statement.
Adding or subtracting the Bank sub a/cs will help in preparing the BRS.
The following scenarios would explain the reconciliation process:
- Cheque received from customer
- Cheque issued to vendors
- Cheque received from Other than Customers
- Direct Debits in Statement
- Direct Credits in Statement
- Fund Transfer between Bank A/cs
Accounting entry of Cheque Received from Customer
Accounting entry at the time of cheque deposit entry
Bank Cheque deposit a/c Debit
Accounting entry after cheque has been cleared in the Bank statement
Main Bank a/c Debit
Bank Cheque deposit a/c Credit
The clearing criteria for updating the bank main account and bank sub account will be amount and document number which will be captured in the allocation field of the bank sub account. The items, which have not been cleared in the bank statement, will remain open in the bank sub account and will form part of the reconciliation statement.
Entry of Cheque Issued to Vendors
Accounting entry at the time of cheque issue
Vendor a/c Debit
Bank cheque payment a/c Credit
Accounting entry after cheque has been presented in the Bank
Bank cheque payment a/c Debit
Main Bank a/c Credit
The clearing criteria used for updating vendor account and Bank cheque payment account will be amount and cheque number. The cheques presented to the bank and are cleared are transferred to the bank main account. The remaining cheque issued will form part of the bank reconciliation statement.
Accounting entry of Direct Debit
Direct debit instructions will be given to the bank for example, LC payments or certain bank charges are directly debited in the Bank Statement. In this case accounting entry is passed only after the entry is passed in the bank statement.
Vendor / Expense A/c Debit
Bank clearing a/c Credit
Accounting entry of Direct Credit
Customer receipts are sometimes directly credited in Bank. E.g. export receipts. In this scenario accounting entry is passed only at the time of bank statement entry.
The following accounting entry is passed
Bank clearing a/c Debit
Customer a/c Credit
Main Bank A/c Debit
Bank Clearing A/c Credit
Entry of Fixed Deposits
Companies have a practice of converting any amount above a limit in its Main bank account, to a fixed deposit subject to a minimum of limit. The FDR number can be filled in one of the fields available in the accounting document.
Entry of Cheque Management/ Cheque Printing cum Advice
The function of cheque management will enable printing of cheque through SAP. Cheque series will be defined for a combination of a Company code and Bank Account. Cheque numbering will be sequential order.
Cheque series for automatic payment has to be in sequential order. Cheque printing facility will be available for the account.
Accounting entry of Cash Management/Liquidity Analysis
The day-to-day treasury process in a company includes a number of transactions. This includes determining the current liquidity using bank account balances (cash position), determining open receivables and liabilities (liquidity forecast), manually entering planned cash flows (payment advice notes), through to clearing bank accounts, that is, collecting multiple bank account balances on one target account.
The main objective is to ensure liquidity for all due payment obligations. It is also important to control and monitor effectively the incoming and outgoing cash flows.
This section shows you the overall liquidity status of your company by displaying together the cash position and the liquidity forecast.