Bank reconciliation: comparing external evidence with the ERP

Bank reconciliation compares external bank evidence with the business's own records. Differences can reflect timing, fees, duplicates or missing entries. Automatic matching speeds review, but similar amounts do not guarantee the same transaction.

DNA supports statement entry and Excel/PDF import, unmatched system transactions, matching algorithms and tolerances, manual matching and approval. Changing the bank account reloads its system transactions, but the reviewed screen does not explicitly clear existing matches in that change handler. Existing pairs must be reviewed against the selected account. A balanced reconciliation still deserves a review of the quality of the matched pairs.

Why reconciliation is necessary

The bank statement and the ERP are separate accounts of activity. The bank records movements through its own process. The ERP records the company's business transactions and their financial effects. Their timing and references may differ even when both are correct.

Reconciliation establishes which records describe the same events and explains the remaining differences. Its purpose is confidence in the account position, not merely a zero displayed difference.

Equal amounts are not enough

Two customer receipts of 500 appear on the same day. Matching the bank line to the wrong receipt can produce a zero difference while associating the bank evidence with the wrong ERP receipt. Bank matching is not itself an invoice-allocation operation. Compare reference, date and payer as well as amount.

The amount is a useful matching signal, but references, dates, payer information, and the underlying business event provide additional evidence. A match can be arithmetically convenient while relating the wrong records.

Timing and missing activity

A payment recorded near the statement cutoff may appear in the next bank period. A bank fee may appear externally before the company records it. A duplicate ERP entry may have no corresponding second bank movement.

These differences require different responses. A timing difference should remain explainable. A missing legitimate transaction may require an authorised entry. A duplicate requires correction of the extra effect. Treating every unmatched line as the same kind of adjustment obscures the cause.

The DNA workflow's business meaning

DNA supports statement entry or import, comparison with unmatched system transactions, matching methods and tolerances, and review or approval. Those features organise evidence and reduce repetitive work.

The selected account defines the reconciliation scope. A comparison against another bank account is not meaningful merely because some amounts happen to match. The reviewed screen reloads transactions for the selected account, but does not explicitly clear existing matched pairs at that point. A previous match must not be assumed valid for the newly selected account.

A trustworthy result

A completed reconciliation should explain the statement period, the relevant balances, the matched events, and the remaining justified differences. The quality of the individual matches matters as much as the final arithmetic.

Reconciliation is strongest when it also reveals recurring causes, such as late entry, incomplete references, or duplicated processing. Those findings can improve the business process that produces the records.