What is bank reconciliation and how do I use it?

SystemSystem Posts: 238 admin

imageWhat is bank reconciliation and how do I use it?

Use bank reconciliation to ensure that all of the transactions on your bank statement have been entered into Wave and that you don't have duplicate income or expenses transactions showing up anywhe...

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edited December 19, 2018 in Help Center Discussion
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  • boston126boston126 Member Posts: 2

    reconciliation is not even displayed on my version of it.

  • SamdSamd Administrator Posts: 560 admin

    Hi @boston126, my apologies about that. Your version of Wave should be upgraded soon, at which point you will have access to this feature! There is no solid ETA for total migration, but we're hoping for sometime early next year.

  • HeidiDHeidiD Member Posts: 2

    I don't see a way to check off items in Wave while I'm reconciling. So I can mark them on printed statement but that doesn't show me items in Wave that shouldn't be there (because they wouldn't be checked at the end of reconciling.) There's the option to check items off in Accounts/transactions page but I no longer see a way to sort that page by account. What's your recommended method for marking items against my statement?

  • starbill72starbill72 Member Posts: 1

    Why would you change a perfectly working system to one that you can not reconcile any longer, and even whatever you had reconciled in the past, is no longer accurate. Horrible!!!!

  • ShmiddyShmiddy Member Posts: 1

    All the starting balances in my reconciliation are wrong even though all my transactions are correct on the site and my statement. so it shows every month is not reconciled

  • livinglightshowslivinglightshows Member Posts: 4

    @HeidiD I spent a lot of time looking into this and their recommended method is completely non-intuitive. Rather than have a reconciliation process where you check off the transactions that appear on your statement to determine if your account balances they want you to set up an additional "Money In Transit" account that correlates to each bank account where you put the checks you have written, when they clear you then create a Journal entry to move the money to your bank account. So how do you know how much money you have available to spend considering uncleared checks written? Well I guess you subtract the balance of your bank account from its associated Money in Transit account. Pretty crazy.

  • HeidiDHeidiD Member Posts: 2

    @livinglightshows said:
    @HeidiD I spent a lot of time looking into this and their recommended method is completely non-intuitive. Rather than have a reconciliation process where you check off the transactions that appear on your statement to determine if your account balances they want you to set up an additional "Money In Transit" account that correlates to each bank account where you put the checks you have written, when they clear you then create a Journal entry to move the money to your bank account. So how do you know how much money you have available to spend considering uncleared checks written? Well I guess you subtract the balance of your bank account from its associated Money in Transit account. Pretty crazy.

    UGH I really want WAVE to work but there are so many issues.

  • MSCCMSCC Member Posts: 1

    Our bank statements quarterly, and we can only reconcile every third month. Is there an option to set reconciliation periods to greater than one month?

  • RHCRHC Member Posts: 2

    Wave
    Can you confirm this Money In Transit account process just to carry out bank reconciliation when you have a transaction straddling the end of month. Seems incredibly complicated

  • ManiMani Administrator Posts: 76 admin

    @MSCC said:
    Our bank statements quarterly, and we can only reconcile every third month. Is there an option to set reconciliation periods to greater than one month?

    Are you unable to see a starting balance for each month from your quarterly report? Does the bank's report not provide a running balance for you? As of now, the time period isn't flexible, but we are looking to make improvements to reconciliation by the end of Q1 2019. I can have the product team consider the implications of your situation.

  • ManiMani Administrator Posts: 76 admin

    @livinglightshows said:
    @HeidiD I spent a lot of time looking into this and their recommended method is completely non-intuitive. Rather than have a reconciliation process where you check off the transactions that appear on your statement to determine if your account balances they want you to set up an additional "Money In Transit" account that correlates to each bank account where you put the checks you have written, when they clear you then create a Journal entry to move the money to your bank account. So how do you know how much money you have available to spend considering uncleared checks written? Well I guess you subtract the balance of your bank account from its associated Money in Transit account. Pretty crazy.

    You're right that our newer accounting platform's account reconciliation feature is incomplete and puts too much onus on our users to track things manually without the rolling balance and checkmark per transaction to more closely narrow in on mismatches. One of our top priorities later in Q1 is to tackle this head on and make improvements, so we hope to have positive momentum for you soon.

    Regarding your comments about Money in Transit, this is a standard practice for checks you've written that haven't yet been deposited, so that you can see this information on your reports. What I understand is that because our reconciliation process is now disconnected from the transactions page and that running balance I mentioned, you aren't able to ignore checks that haven't yet hit your bank account statement as withdrawals. Therefore, it looks like your at a mismatch when in fact you'd like to just ignore this Money in Transit. If I'm understanding you correctly, this is also related to one of the things we'd like to make better in the near future, and I'd like to apologize for it being subpar at this time.

    CC: @RHC (see above as it relates to your question) -- for now, the Money in Transit technique is the only workaround, and we hope to make this better for you all soon.

    edited January 17, 2019
  • LuzTLuzT Member Posts: 1

    Extremely disappointed... I just spent the last 3 weeks reconciling all of our accounts for previous years as we are behind on taxes and an accountant agreed to work with us... I came in to finish 2017 and start 2018, and ALAS! ALL OF MY ACCOUNTS BALANCES ARE OFF AND SHOW AS UNRECONCILED! I need help. I don't know how, but I need help. Even if it's to get all of our stuff out of here and go to another platform. I cannot explain how I have to try to find statments for the last 3 years to do all over again because there was an update in the accounting system and now everything is screwed up!

  • BlingoAliBlingoAli Member Posts: 1

    I've used Wave for several years and it's always been solid and usable, if occasionally quirky. But now...

    You're right that our newer accounting platform's account reconciliation feature is incomplete and puts too much onus on our users to track things manually without the rolling balance and checkmark per transaction to more closely narrow in on mismatches. One of our top priorities later in Q1 is to tackle this head on and make improvements, so we hope to have positive momentum for you soon.

    One feature that every business, large or small, uses is reconciliation. If the new software doesn't have a properly working, straightforward reconciliation system, picking up the reconciled balances from the previous version, then WHY RELEASE THE UPDATE?

    The previous system never worked for me due to transactions that straddled statements, but that was fine as I could just mark individual transactions as reconciled and see the reconciled balance change at the top of the page. When it matched my statement balance, I was done. Now I seem to need to reconcile every statement on every account since 2014 to get my books back in balance.

    There's two months until I have to produce my end-of-year accounts. The clock is ticking.

  • vathimanvathiman Member Posts: 2

    What a nightmare. Why "fix" what ain't broke?!?!

  • SandraKWSandraKW Member Posts: 7

    HORRIBLE! So many problems with your new reconciliation system! I want to be able to check off each item as verified, not just look a monthly "report" that may not include a check that was written one month and cashed the next or something that went through on the 1st instead of the 31st because of a holiday or weekend. I believe that issue is what has thrown off all of my previously reconciled accounts - now showing up as "unreconciled." Why can't the monthly report dates be changed? Also, why are my PayPal revenue and payments showing up as Money in Transit? My Paypal account is just like another bank account, not money in transit. So frustrating!

  • SandraKWSandraKW Member Posts: 7

    Another issue. When you open the reconciliation report and find something that needs to be added or changed, you go in and make the change but the change doesn't show up on the report, even after you refresh it! So what's the use? The beginning balance is way off anyway because it doesn't recognize that your accounts have been verified and reconciled, even though they have. I also noticed that adding a customer is much harder and after you do it the customer doesn't show up, even after refreshing the page. It was so much easier before. Can't you just "undo" the updated system back to how it was???

  • BSodanoBSodano Member Posts: 2

    How do I change the reconciliation (ending balance) date ? None of my accounts reconcile the last day of each month.

  • breezee888breezee888 Member Posts: 1

    When something is not broken, why fix it? The new version is HORRIBLE. First of all , in the past it was so easy to mark a transfer between accounts. Now with this new convoluted way to do it, sometimes new transaction gets created that mess up the whole account. Secondly, the reconciliation!!!! I've reconciled everything in the past as i verified each transaction in the past, and now all of sudden I have to reconcile everything again for the past 2 years since we opened the business???? it simply doesn't make any sense. I wish we could just roll back to the previous version. It was much more user-friendly.

  • nampara17nampara17 Member Posts: 3

    Sorry guys - I have to agree with all the comments. This is not how you reconcile bank statements.
    Go back to your old way - it's been this way for 100's of years and it works!
    So; transactions, enter the open and close balances and as you tick off items you get back to 0 difference!
    Simple = easy = Works
    Please please please use the old way!

  • nampara17nampara17 Member Posts: 3

    BTW I now have 4 years of transactions where the reconciliation is saying it's out of balance - before I had everything reconciled correctly - basically a nightmare! Accountant and I have spent over 2 days trying to sort out this mess and got absolutely no where.
    You guys are normally so good at adding brilliant features (Love the system), but on this, you've made a serious mistake, you need to roll back pronto...

  • wmhochwmhoch Member Posts: 1

    Same problem as nampara17. Prior to the upgrade my bank account was fully reconciled on paper. We did not keep paper copies back to 2013 because we didn't think Wave would tamper with 5 year old transactions. Yet the balances in the system since the upgrade do not match the hard copy balances from Wave prior to the change. Part of the problem, we discovered, is that there were bank syncs that never hit the ledger until now. Somehow these synced transactions were pushed out to my GL during the upgrade. Unfortunately, the new system does not show the merge history, so I can't tell what's new and what's old. Customer support suggests that I start by using the brand new reconciliation feature to figure out where Wave altered my historical data. Wave altered my historic data and cannot has yet to respond to my request for a backup of my data prior to the change. Every accountant will tell you the first thing you do before an upgrade is back up your data. This is a train wreck!

  • ManiMani Administrator Posts: 76 admin

    We appreciate the strong sentiment here, feel your pain, and changes are coming. We acknowledge that you have questions and are confused about the lack of robustness and ease of reconciliation in the new system. We've missed the mark here for you and have to course correct. Our team is presently designing and user testing a version of reconciliation that we believe will meet and exceed your expectations so that we may win back your trust on this front. For those who've migrated over from the old system, these changes will come in steps as quickly as we can bring them to you.

    There are legitimate reasons why only reconciling against verified transactions isn't ideal, and that's a behaviour we enabled in our old system that we're looking to help change in the new system. For example, your reconciled balances could exclude transactions on your ledger that then would show up on your reports. This confused many users that are less experienced with bookkeeping, while also causing more experienced users to have a drift of data that was hard to pinpoint.

    That said, we know this change has 1) broken historical reconciliation for some people who left unverified transactions in their system, 2) made it unclear what is or is not reconciled due a switch to month-based reconciliation and 3) is a leap that's hard for you to make given our new workflow isn't good enough to make your life easier than before. Bear with us as we look to remedy this in the coming weeks.

    edited February 26, 2019
  • BarbBarb Member Posts: 4

    I need to do my taxes. I had a hard time figuring out why reconciling was not working right until I found this article. Do you have an ETA as to when it is safe? I need to redo all of last year before I see my accountant.

  • whamer99whamer99 Member Posts: 1

    As it stand, this tool does not in any way help me to reconcile accounts. I look forward to an update as soon as possible. Thanks.

  • aheissaheiss Member Posts: 5

    I'm new to having to manage/account finances in respect to running my own proper business. When trying to decide if Wave is the right tool to help, it's probably most important that :

    1. The tool will eventually meet needs, in time
    2. Won't corrupt efforts spent
    3. Is time efficient
    4. Would allow me to extract information were I to decide to go elsewhere
    5. Most importantly, adapt and improve over time.

    While I can appreciate the strong sentiment discussed, the responsiveness of Wave appears quite impressive. While I'm no expert, it would seem to me that the shift/change from cash to accrual type accounting really does have end users in mind, for the long run. Short term mistakes/pain seem no problem to me as long as they are corrected, in time.

    Can anyone else validate this? Am I correct to assume that all these workarounds/feature gaps are (or have been??) a temporary pain as Wave adapts to enable better feature for end user? Is accrual accounting the best way to start out/learn vs the cash accrual if I had my own best interest in mind and expect a growing business?

    Thank you,
    Alex

  • Katie_SilkinaKatie_Silkina Guest, Unconfirmed, Applicant, Member, Administrator, Moderator, Employers Posts: 73 admin

    @Barb as acknowledged by Mani the experience is not ideal, but I wanted to confirm that it is indeed safe - your reports and transaction data are accurately displayed. In order to not wait for the updates that our team is hard at work on, I would recommend working with the Reconciliation tool, our Transactions page and your monthly bank statements to ensure the line-items are accurately uploaded.

    @aheiss To answer your first question - we are always learning from customers like you about the ways they use our software, the different business cases that we must solve for, and the types of experiences that are good, broken, or exemplary. The team has prioritized the reconciliation experience improvements as one of our top priorities in large thanks to everyone who has taken the time to post here, have their voices heard, and make sure that we at Wave are clear on what the right experience for our customers must be.

    To answer your second question, I am no expert on accounting reporting standards, but there are pros and cons to both systems. As mentioned in our Fearless Accounting Guide (take a look at pages 59-61):

    "In general, accounting on an Accrual Basis provides a much better platform to understand, and better manage your business. The vast majority of business owners in North America, however, are required to report and pay taxes on the Cash Basis, which has the advantage that the government isn’t asking you to pay tax on work you have not yet been paid for.

    This leads many small businesses owners to believe they should run their accounting on a Cash basis, but this is not the case. Accounting on an Accrual basis gives a much clearer and more actionable understanding of your business throughout the whole year, and adjusting your Year-end numbers to Cash basis to file taxes is quick and easy. The reverse is not the case."

  • jk108jk108 Member Posts: 4

    We're not using Wave yet but thinking of switching. This thread is quite alarming given the change seems to have negatively impacted a lot of existing users. I am wondering, however, what problems exist with the new reconciliation module as a new user, since it seems like some of the complaints are around lack of backwards compatibility with previous reconciliation data? @Katie_Silkina can you clarify and also, is it correct that Wave now is only offering Accrual accounting or am I misunderstanding?

  • Ryan_WRyan_W Administrator Posts: 461 admin

    @jk108 thanks for checking us out! From experience, the reaction to the new reconciliation tool is a mix of pain points for people moving to a different system, combined with some design choices on our end that we need to address. We're currently revamping the reconciliation workflow, and it's a more intuitive, user-friendly process than the current one (I checked out some design mocks, and it looks really promising). Not sure if that's the colour commentary you're looking for from Katie, but that's my two cents.

    As for accrual vs. cash basis accounting, one of our many overarching commitments is to creating a robust accrual accounting platform, so the primary accounting logic and functions are going to be consistent with accrual-based principles. That said, the newest updates include more flexible cash and cash-equivalent filters on reports, as well as a cash-modelled Income by Customer report, which we included based on the feedback we received in the legacy version of Wave. Hope that gives some useful insight!

  • arilleraarillera Member Posts: 1

    Any updates on if this has been updated? I am having a nightmare of a time trying to reconcile my accounts. Everything was matched correctly, and now my numbers are all out of whack for tax prep.

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