Your first bank reconciliation after switching accounting software

Why the first one is different

Bank reconciliation in established books is routine: last month's ending balance is this month's beginning balance, you tick what cleared, and the difference is zero. Our step-by-step reconciliation guide covers the routine.

The first reconciliation after a switch has no last month. The new program doesn't know which of your old transactions had already cleared, what was still outstanding, or which statement you last agreed to. Get those three things right and the first reconciliation is as quick as any other. Get them wrong and you can lose an afternoon chasing a difference that was there before you started.

Start from a reconciled statement

The anchor is the last statement your old software reconciled. On that date you know two things for certain: the bank's balance, and that your old books agreed with it apart from the outstanding items your old reconciliation report lists.

• If you can, make your switch date the day after a statement date, for example switch on June 1 when the May statement ends May 31. Then opening balances, the last old reconciliation and the first new statement all line up.
• Before you leave the old software, reconcile up to that statement and save the reconciliation report as a PDF or Excel file. It lists the outstanding cheques and deposits in transit.
• Do the same for every credit card account. Cards follow the same rules, with charges and payments instead of cheques and deposits.

The opening balance is the book balance

This is the most common mistake. The opening balance for your bank account in the new books is not the statement's ending balance. It is the balance in your books on that date:

The book balance is also what your old software's trial balance shows for the bank account on that date. If you moved with a trial balance, you already have it. If the trial balance and this calculation disagree, the old books weren't reconciled to that statement after all; sort that out first.

Outstanding cheques and deposits

The outstanding items need to exist in the new books, or they'll never clear. There are two ways to get them there.

1. You moved with history. The cheques and deposits are already in the new books, dated before the switch. Mark everything up to the old statement date as cleared, then untick the outstanding ones. They wait for your first new statement, like any other uncleared item.
2. You moved balances only. Enter each outstanding item separately, dated when it really happened, rather than as part of one lump-sum balance. A $2,150 lump can't clear when the bank shows three cheques of $900, $750 and $500.

Then reconcile your first statement after the switch the ordinary way: the beginning balance is the old statement's ending balance, and the outstanding items clear as they appear.

Doing it in AcboBooks

AcboBooks' Banking → Reconcile screen has a button for exactly this, added in version 0.2.10: Mark everything up to <statement date> as cleared. It ticks every item on or before the statement date, including older ones not drawn on screen, and shows how many items that is, their total, and the book balance on that date. Untick all starts again.

When you open Reconcile for the first time on a long account, for example one moved from QuickBooks, AcboBooks explains the steps on screen:

1. Set the statement date and ending balance from the last statement your books already matched.
2. Click Mark everything up to … as cleared.
3. Untick anything that hadn't cleared yet: the outstanding items from your old reconciliation report.
4. The difference is $0.00 when the statement agrees with the books on that date. Finish.

From then on each statement reconciles as usual, with interest and service charges entered from the same screen. If you moved from QuickBooks Online and loaded the Transaction Detail by Account report with its Cleared column, the reconciled status comes across with the move, and you may not need the button at all. Statements come in as OFX, QFX or CSV files under Bank Feeds; AcboBooks doesn't connect to banks live.

When it doesn't come to zero

• The difference equals an outstanding item. You ticked something that hadn't cleared, or left one unticked that had.
• The difference equals the opening balance gap. The opening balance was entered as the statement balance, not the book balance.
• Something appears twice. A statement import overlapping the history you moved brings the same transactions in again. Delete the copies, don't adjust.
• The difference is divisible by 9. Often two digits swapped in an amount.

If you still can't find it and it's small, AcboBooks can Finish with adjustment: it posts the difference to a Reconciliation Discrepancies account, dated the statement date, and the Reconciliation Discrepancy report shows it later. Do that only after looking. A finished reconciliation can be undone from the history list if you find the real cause later.

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