Bank Reconciliation in Business Central

Bank Reconciliation in Business Central: Fast, Accurate Month-Ends

Bank reconciliation can be either a tidy tick-box or a month-end time headache. In Business Central (BC), we use statement imports, matching rules, and clear reports to finish faster with fewer errors. Below is the process you can implement, the pitfalls to avoid, and the specific set-up that makes reconciliations quick and audit-ready.

Why bank reconciliation matters (and what goes wrong without it)

Close speed:

Reconciling weekly (and fully at month-end) keeps cash books aligned with the bank, so month-end is a confirmation exercise—not a detective job. We consistently see teams cut close time by 30–50% once the routine is embedded.

Cash accuracy:

Accurate cash figures drive decisions on payments, payroll, and VAT. A £5k timing difference can trigger unnecessary borrowing or late supplier payments; BC helps surface these mismatches early.

Auditability:

Auditors look for a clean trail from the bank statement to the ledger. Posted reconciliations, test reports, and documented adjustments in BC provide that trail—no spreadsheets required.

Error detection:

Small unmatched items and duplicate payments hide in manual processes. BC’s matching and exception views make outliers obvious so you can act immediately.

The core flow in Business Central

1) Prepare the Bank Account in BC

• Create/verify the Bank Account Card (currency, IBAN/sort code, Bank Account Posting Group).
• Set the No. Series for statements and ensure the GL bank account matches the real-world account.
• If you’ll import files, confirm the import format (CAMT.053, MT940, CSV) and ensure the data exchange definition is configured (or use an AppSource connector if your bank/feed requires one).

2) Import bank statements (file or feed)

• Go to Bank Account Reconciliations → New → choose the bank account and statement date/number.
• Use Import Bank Statement to bring in your file (CAMT/CSV/MT940). A good file includes value date, amount, description, and reference.
• Where you use a connector, statement lines will arrive automaticall. Treat them the same way as imported lines.

3) Automatic matching that actually works

• Hit Match Automatically. BC lines up statement entries with bank ledger entries using amount, date, and description.
• Improve matches with:
  • Date tolerance: Allow a small window (e.g., ±2 days) for weekends/holidays.
  • Description hygiene: Encourage payees to include invoice/customer refs; it pays off in matching quality.
  • Payment Reconciliation Journal rules (for daily receipts): Configure Text-to-Account Mapping to auto-post bank fees/interest and use application rules to link receipts to open customer/vendor entries.

4) Deal with exceptions quickly (manual match & adjustments)

• Use Bank Statement Lines and Bank Ledger Entries panes to review Unmatched items.
• Typical fixes:
  • Customer receipts not yet posted: Post via Payment Reconciliation Journal and re-match.
  • Bank charges/interest: Post via Text-to-Account Mapping or create a simple General Journal entry.
  • Duplicates: Mark as Rejected or correct the underlying entry.
• Keep a short list of common reasons and the fix—teams move much faster with a standard playbook.

5) Test, post, and evidence

• Run Bank Acc. Reconciliation – Test before posting; it highlights differences and line errors.
• Post when the Difference is zero (or within your approved tolerance, see note below).
• Review in Bank Account Statements and archive the Test Report to your month-end folder. This is your audit evidence.

Note on tolerances:
Use Payment Tolerance features for customer/vendor under/overpayments (finance setup). For bank reconciliation, aim for zero difference; only use a tiny tolerance if your policy allows it and document why.

Payment Reconciliation vs Bank Account Reconciliation (when to use which)

In practice, run the Payment Reconciliation Journal daily/weekly, then perform the Bank Account Reconciliation at month-end. This two-step rhythm keeps the final reconciliation clean and fast.

Best practices we recommend (and configure)

Automate recurring items:

Use Text-to-Account Mapping for bank charges, interest, and card fees. Create simple, clear rules; test them on a small statement before going live.

Reconcile little and often:

Run the Payment Reconciliation Journal weekly (daily if volume is high). The month-end bank rec then becomes a formality.

Separate accounts by purpose:

Maintain distinct GL/bank accounts for card settlements, payroll, and FX. Mixed activity slows matching and confuses reporting.

Tidy master data and references:

Encourage customers to use invoice numbers as payment references; align supplier references too. Better references = better auto-matching.

Control who can post:

Use BC permission sets to separate preparation and posting. Maker–checker keeps errors and fraud at bay.

Common pitfalls (and how to avoid them)

Relying on manual matching:

You’ll never keep up. Configure rules once; they’ll save hours every month.

Leaving “pennies” unmatched:

Small differences add up and undermine trust. Chase them down or document an approved tolerance policy (and use it sparingly).

Forgetting non-bank cash accounts:

Petty cash and credit cards also need regular reconciliation. Treat them like banks.

No test report before posting:

The Test action catches missing lines, date issues, and differences—use it every time.

One person does everything:

Split duties: one prepares, one reviews/posts. It improves quality and satisfies auditors.

Troubleshooting unmatched lines (quick fixes)

Customer receipt with no open invoice:

Check if the invoice posted after the bank date—apply it manually or leave as on-account with a clear narrative.

Card settlements net of fees:

Use Text-to-Account Mapping to split gross amount and fees automatically; match the net receipt to the bank.

Roundings and FX differences:

Confirm currency and exchange rates on the bank account; post rounding to a dedicated Exchange Gain/Loss account.

Duplicate transactions in the file:

Mark as Rejected and verify the bank exported only once per period.

Next step

We’ve implemented this set-up for UK SMEs. The pattern is the same every time: sort out imports and rules, reconcile little and often, and lock down posting permissions.

Month-end gets quicker, the numbers get cleaner, and the team gets its evenings back.

If you’d like us to review your current bank reconciliation set-up in Business Central and tune it for speed and accuracy, get in touch. We’ll map your process and give you a practical improvement plan.