17 Nov Matching versus Reconciling
Matching versus Reconciling
Now that online banking has become more main stream, the issue of matching versus reconciling in QuickBooks deserves some discussion.
Before we begin, it is usually helpful to provide a few definitions to ensure we are all talking about the same alternatives:
Importing – this is obtaining a file from the financial institution for the purposes of entering transactions into QuickBooks. Many banks offer an IIF type of file, which simply imports the information that is provided in an Intuit approved format. Still others offer QIF (Quicken format) that can be converted to an IIF format with an add-on product. With this method there are no logs of what has been done and there is not any error checking.
Integrating – since the release of the SDK (software development kit) by Intuit in 2001, many developers have used this information to develop add-on software products that enter information into the QuickBooks data file. The advantage with this method is that the developer can build in error checking and transaction logs to verify what has actually happened.
Matching – by signing up for online banking, it is possible to use QuickBooks to access the QuickStatement online from the bank through the Online Banking Center. QuickBooks then looks at check numbers first and amounts second to attempt to determine if the transaction has already been entered. If the check number and amount agree (starting with the oldest transactions first) QuickBooks will designate the transaction as matched by placing a lightening bolt in the cleared column in the register.
Reconciling – this is a specific QuickBooks feature that is done as the bank statement arrives each month. Through this process, any transactions that have been entered in error, never cleared the bank, etc. are obvious. Transactions that are in process will display an “*” in the cleared column, transactions that were included on a completed reconciliation, will display a check mark in the cleared column.
Tips & Tricks – Now a few tips and tricks regarding the difference between matching and reconciling:
- While matching is an effective way to determine which transactions have cleared the bank, based on the difference that can exist for deposits, transfers, and electronic payments, the matching process is often not as automated as first thought. Extreme care needs to be used when either matching the transaction to an existing entry, or adding an entry to the register.
- When adding the transaction to the register, assigning the appropriate account is still required, and only one account can be chosen. For transactions that need to be assigned to multiple accounts, they will need to be entered first and then matched.
- Even if the transactions are matched, effective accounting procedures still require the reconciliation process. The reconciliation reports provide a valuable paper trail. The uncleared transaction section of the report is critical to discover banking or data entry errors.
Summary – the matching process can help expedite the data entry process since the date and amount are present, but this does not completely automate the process nor does it eliminate the need for the accounting controls provided by the reconciliation process.