Bank Reconciliation within Microsoft Dynamics 365 Business Central is powerful, but if it is not set up correctly, it can wreak havoc.
Microsoft Docs does have some documentation (on managing bank accounts in BC and auto-reconcile bank accounts in BC), but it doesn’t provide much of a step-by-step and inexperienced users may miss some things that seasoned veterans of the system know to look out for.
Setting Up Bank Rec Yourself
We recently had a valued client attempt to link and set up automated Bank Reconciliation on their own without guidance but soon found themselves buried in muck because Microsoft’s instructions aren’t clear.
Critical issues included accounts not aligned causing havoc with balances, and cash not balanced to zero preventing the bank rec from functioning correctly. Wrong settings were checked with incorrect postings happening behind the scenes. Required clearing entries were missed and the manual correcting adjustments meant to remedy the situation complicated everything even more. It was a total nightmare.
If you find yourself with this issue, and can catch it quickly enough, you may be able to do some reversing entries, but if has gone on too long with high volume of entries, there will be a significant support project to fix it.
BC Bank Rec Troubleshooting
Below we have compiled a short list of some of the things that were identified by our team to have caused problems in Business Central for our clients who have tried to establish bank rec on their own. These can act as cautionary tales and a checklist to look out for.
- The first two months of bank reconciliation should be done manually, with guidance, learning the process, and confirming correct setup prior to linking to banks.
- Direct Posting should be turned off so it doesn’t allow you to “skip” the part where you affect cash. If Direct Posting is turned on, entries will post directly to the general ledger and skip the bank completely. Months later, the balances can be significantly off (by millions, in one client’s case) due to cash posting incorrectly without bank ledger entries.
- Sometimes, in an effort to resolve, clients also made entries that needed to be identified, reconciled, and reversed that were just never cleared.
- Also, be sure to note that Direct Posting and Posting Groups are different. Posting Groups allow you to set up your GL account for the bank account.
- The bank account, posting group, and GL account should all mirror each other.
- One client had a bank account posting to the GL account for Net Income; this is not a correct set up because when you post a payment from that bank account, instead of lowering cash and lowering payables, it lowers income and lowers payables.
- The system will not post unless the bank reconciliation nets to “0.” Running a linked bank rec without being balanced will cause a rapidly growing imbalance that will continue to wreak havoc.
- Consider sending a screenshot of your settings to your Business Central partner when you do new set up or change settings. It’s always better to be safe than sorry, and we were all so sorry about the stress this powerful function caused without the necessary knowledge to set it up correctly.
To begin to help remedy the growing bank reconciliation in Business Central problem we keep seeing, our team created a quick video.
We also will publish more bank rec blogs in the coming months. However, if you are seeing problems, please do not hesitate to reach out to our Business Central support staff. Nipping the issue in the bud is paramount before it becomes a larger problem, and our team is here to help!