Record to report / R2R – Reconciliations

Bank

We elaborated on two items constituting a reconciliation.

Moving on to the next set of items:

  • Standing instructions charged but not recorded – Quite often the accounting department gives standing instructions for certain types of transactions, like EMIs, rental payments, recurring deposits etc. The bank promptly sets up an automated mechanism to execute these instructions, but the accounting department, in most situations, does not automate it in the ERP. The execute these, rather record these manually, which triggers reconciliation requirements.
  • Direct remittances received but not informed – In case of large and regular customers, the moment a payment is processed, the ERP of these customers triggers release of payments, based on automated procedures, and their banks remit the same to the bank accounts of our clients / principals. The remittance advise is electronically / physically generated, but gets lost in spam filters / postal delivery issues. So quite often, when a statement is sent by the bank, a reconciliation activity has to be triggered to identify these payments. We have seen items over a year as well featuring on this count, as it just could not be identified as to who and for what was a remittance sent.
  • Bank interest and charges debited by the bank, but not informed – Normally any interest / charges are debited to the bank account, based on the account opening instructions. These come to the notice of the accounting group, when periodical bank statements are received. Also, charges for outstation collection of checks / cheques are reduced from the amount collected, by the bankers. This leads to reconciliation requirements.

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