Payment Reconciliation Journals in Business Central

By - August 17, 2021

Did you know you could use the Payment Reconciliation Journals to perform tasks beyond just a simple import of a bank statement? How about using them to handle sweep accounts, or to reconcile credit card statements? Yes, I have used them for both.

This is a wonderful feature for being able to import data (statement) from a financial institution (bank or credit card vendor) and apply the entries based on matches with the text information from the statement. Business Central will create the matches automatically (based on mappings you establish). You can then review the entries and make any necessary changes to the automatic application prior to posting the payment reconciliation journal. You can also use it to automatically reconcile the bank account when the payments are applied.

Payment text is automatically matched with the entry information based on how you have the logic setup on the Text-to-Account Mapping page.

Let’s first discuss the use of the payment reconciliation journal in Business Central to process credit card statements. I like to use the example of my credit card statement. You know you always have those transactions that come through from the ride sharing services. They always contain the name of the service, a date, and transaction number. You can map portions of the text, such as the name of the service, so that every time an entry is processed that contains the name of the service it maps to your travel expense account.

You might also have a number of entries for office supplies or computer equipment that you always by from the local office supply store or national electronics chain. You can set up the logic so that every time an entry contains the name of the store or chain it maps the entry to the office supplies expense account, or even maybe a fixed asset account for computer equipment.

You could even create the purchase invoice for the actual vendor, so you can keep track of purchases. I.e. you can set up the mapping logic to have the payment map to the vendor rather than to a G/L account.

So, how does all of this work? It is quite simple. The first step is to create a bank account, yes, for the credit card. You will need to set up the bank posting group to map to the credit card payable account. It is worth setting it up if you do not already have the account, and you will see why shortly. I then link the bank account to the financial institution – just like you would if it was a bank account. Once they are linked, you can use the Import Bank Transactions on the payment reconciliation journal.

Use the Tell Me (search) to locate the Payment Reconciliation Journal or select it from the Cash Management navigation if you use the Accountant Role. Select ‘Process’ and then ‘New Journal’ to create the entry. Once on the Payment Reconciliation Journal, you use ‘Process’ and then ‘Import Bank Transactions’. You can specify the date ranges for the data you want to import.

The data is imported with the transaction date, transaction text, amounts, etc. You then teach Business Central the logic/rules of how you want the transactions to be handled. Simply select a row and select ‘Manual Application’ and ‘Map Text to Account’. You can then define how you want the text on the payment to map. It could be to a customer, vendor or a general ledger account. It will map to the designated account when you choose the ‘Apply Automatically’ function on the Payment Reconciliation Journal. Overtime, you will have taught Business Central exactly where you want the offset to be posted. The credit of course posts to the credit card payable account assigned to the Bank Account Posting Group assigned to the bank.

You can then post the entry. So, the total amount is now in the credit card payable account. You can then simply create the entry to the credit card vendor (where the vendor posting group is set to your accounts payable account) with the offset being the credit card payable account. This removes the amount from credit card payable and adds it to your normal accounts payable account. You would then pay the credit card vendor as you do any other vendor. This new process ultimately saves you time in processing all the transactions on your credit card statement.

I also use this for reconciling sweep accounts. Let’s assume I have two bank accounts. One (my operating account) is used for processing all my payment and cash receipt transactions. The other is my account that will automatically transfer amounts from my account on a daily basis. Link your sweep account to the bank and use the Payment Reconciliation Journal to process all the transactions. The offset will always be the account used as the operating account. Change the Account Type to Bank Account and the Account No. to the bank associated with the operating account. This will reconcile the sweep account, but be sure to also add all the entries into your operating account for reconciliations.

The use of the Payment Reconciliation Journal makes processing these tasks so much easier.

This post was originally posted on the Dynamics Discussion blog.

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