Record to report / R2R – Reconciliations

Bank

Last post was a listing of the key types of items which will comprise of a standard reconciliation.

Let us elaborate these a little more:

  • Checks/cheques presented, but not cleared – Checks / cheques have been received from customers and other entities. These were deposited in the bank and are in the clearing process by the bank. So your client’s accounts group has credited these already, however, the bank has not. Another reason for delay in credit by the bank could be that the checks were sent to an outstation location, either within the country or internationally. In such a situation, it will take a reasonably longer time to be credited by the bank to your account. Quite often, this may take upto a month or so.
  • Checks/cheques issued but not presented – Checks / cheques have been issued to the vendors or other parties by the accounting department, but these have not been deposited by the receiver of the instrument into their bank account. So technically, though our books will show a lesser balance, however, the banks will reflect a higher balance. We have seen in some situations that these remain outstanding for even three to five years. This happens quite often, where the checks are mailed and get lost in transit. The prospective receiver may or may not be aware of the fact that he has to receive the payment. Companies have to take additional steps then to ensure that the payee does get information and corrective action can be taken.

More to follow…..

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