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      How do I reconcile transactions in Bank Reconciliation?

      Bank Reconciliation (Bank Rec) is the process of matching transactions from your bank statement to entries in FreshBooks. Once you have a bank account set up with an Opening Balance with the steps here, you can start matching transactions which is the reconciliation process.

      Matching transactions should be completed at regular intervals for all of your bank accounts, to ensure your business’ records are correct.

       

      Accounting features like Bank Reconciliation are available on trials as well as Plus and Premium plans. We also recommend inviting an accountant (if you haven’t already) to help you learn more about Bank Reconciliation.

       

       

      Unmatched Transactions

      Before transactions are reconciled they will remain in an unmatched state. There are two types of transactions that may or may not affect your reports inside your account:

      Unmatched Money-in Transactions

      • These are Unreconciled Bank Transactions in your account like deposits and payments received, and anything else that is an increase to your bank account balance
      • Will not affect your reports until you Match or Mark as inside Bank Rec

       

      Unmatched Money-out Transactions

      • These are Unreconciled Bank Transactions in your account like expenses, payments made and anything else that is a decrease to your bank account balance
      • Displayed both under the Bank Transactions and the FreshBooks Entries sections inside your Bank Rec widget (Bank Connections automatically creates an expense entry in FreshBooks to correspond with the money-out transaction imported from your bank account)
      • Will affect your reports; flows through Petty Cash first (increases Expense account and decreases Petty Cash account)
        • Once these money-out transactions are Matched or Mark As…, these transactions will be attributed to the Bank or Credit Card account instead of Petty Cash

       

      Matching Transactions

      To start reconciling your transactions, use the below steps:

      1. Click on the Accounting section
      2. You’ll now see your bank account(s) listed in the Bank Reconciliation widget, click on the x left to match linkLink indicating number of transactions left to match.
      3. FreshBooks will automatically match transactions for you
        1. If you see matches that are actually bank transfers or incorrectly matched, click on the checkmark to deselect it
        2. If you see matches that are correctly matched and there is nothing to change, keep it checked off
      4. Click Confirm and Continue to proceed.

       

      Any remaining unmatched transactions will need to be matched by you manually. Depending on what kind of transaction you need to match, choose from the below options and follow the specified steps:

       

      Match

      If you have an Unreconciled Bank Transaction and you see the corresponding entry (or multiple entries) in the FreshBooks Entries section, use the below steps to match them together.

      If your FreshBooks Entry isn’t listed, check the date range, or make a new entry. If it is a Transfer, Owner’s Equity, or Expense Refund, use these steps instead.

      Only entries from the date you start Bank Rec (as stated in your Opening Balance) and moving forward will be listed.

       

      1. In the Bank Account Transactions section on the left, check off a transaction
      2. Then in the FreshBooks Entries section on the right, use the search bar if you need to find your entries, and check off one or several entries that match
      3. Click on the Match button.Two transactions selected to match.

       

      Change the Date Range

      This is useful if the transactions you’re looking for are not listed because they fall outside of the date range.

      1. Click on the settings icon on the right side of the search bar under FreshBooks entriesSearch bar with filters pop-up indicating date range to select.
      2. Choose a new Start and End date
      3. If needed, you can specify the Entry Type (Payments & Other Income only, Check payments only, Expenses only)
      4. Click Apply to save and new entries should appear on the right
      5. In the Bank Account Transactions section on the left, check off a transaction
      6. Then in the FreshBooks Entries section on the right, check off one or several entries that match
      7. Click on the Match button.

       

      Create a New Entry

      If the FreshBooks entry doesn’t exist yet, you can create it with these steps:

      1. Under FreshBooks Entries, click on the Create a New Entry linkCreate a new entry button.
      2. Then choose from Expense, Other Income, or Payment depending on what kind of matching entry you need to create
      3. Once saved, this entry will now appear in the list of FreshBooks Entries
      4. Check off the entry or entries that you’ve just created
      5. Click on the Match button.

       

      Mark As...

      If your Unreconciled Bank Transaction doesn’t require an accompanying FreshBooks Entry to match it to because it is a Transfer, Owner’s Equity or Expense Refund, choose from the below for the steps:

       

      If the Unreconciled Bank Transaction is meant to be matched to one or multiple FreshBooks Entry/Entries, use these steps instead.

       

      Mark as Transfer

      If the transaction is a transfer to pay off a balance in another account (e.g., bank transfer for credit card debt), you can mark it as a transfer without needing to match it to a FreshBooks Entry:

      1. Check off the box next to the Bank Account Transaction
      2. Click on the Mark As button at the top
      3. Select Transfer
        Mark as transfer option for transaction.
      4. Enter details on the transfer as needed in the Note box
      5. Click Submit to finish and the Bank Account Transaction will no longer appear as an option to match. The corresponding imported Expense on the FreshBooks Entries side will also be deleted automatically.

       

      Notes:

      • When marked as a transfer, two accounts will be affected in your reports:
        • Money-in transactions marked as transfers:
          • Will increase the balance in the connected Bank account and decrease the balance in the Petty Cash account
        • Money-out transactions marked as transfers:
          • Will decrease the balance in the connected Bank account and increase the balance in the Petty Cash account
      • Once Marked as Transfers, they can be found in the Matched tab in chronological order of when you marked them with a note indicating it is a Bank Transfer

       

      Mark as Owner’s Equity

      If the transaction is Owner’s Equity (explained here), you can mark it as so with the below steps:

      1. Check off the box next to the Bank Account Transaction
      2. Click on the Mark As button at the top
      3. Select Owner’s EquityMark as owner's equity option for transaction.
      4. Enter details on the equity as needed in the Note box
      5. Click Submit to finish. The Bank Account Transaction will no longer appear as an option to match. The corresponding imported Expense will also be deleted automatically.

       

      Notes:

      • Once marked as Owner’s Equity, you can find them in the Matched tab in chronological order of when you marked them with a note indicating it is Owner’s Equity

      • These transactions will also be located inside the Owner’s Equity account on the Chart of Accounts

       

      Mark as an Expense Refund

      If the transaction is a payment you received from a vendor when returning an Expense, you can use the Mark as an Expense Return option. Use the below steps:

      1. Check off the box next to the Bank Account Transaction
      2. Click on the Mark As button at the top
      3. Select Expense RefundMark as expense refund option for transaction.
      4. If the expense was originally marked as Cost of Goods Sold (COGS), check the box off to Mark refund as Cost of Goods Sold
        Mark refund as cost of goods sold checkbox on expense refund form.
      5. Next, choose the Refunded Expense Category
      6. Then enter details about the return as needed in the Note box
      7. Click Submit to finish. The Bank Account Transaction will no longer appear as an option to match. The corresponding imported Expense will also be deleted automatically.

       

      Notes:

      • Once marked as an Expense Refund, you can find them in the Matched tab in chronological order of when you marked them with a note indicating it is an Expense Refund

      • These transactions will be located inside the original Operating Expenses account on the Chart of Accounts

      • This will also reduce the amount in the Operating Expenses account; otherwise, if it has been marked as COGS, then the specific expense category account under the parent COGS account will be reduced instead

       

      Viewing Matched Transactions

      All matched transactions, including those marked as Transfers, Owner’s Equity and Expense Refunds, can be viewed with the below steps:

      1. Click on the Accounting section
      2. Click on the x left to match link for the account you want to review in the Bank Reconciliation Widget
      3. Click on the Matched sub-tab.

      If you’ve accidentally matched the wrong transactions together, you can unmatch them by checking off the box(es) next to the match(es), and clicking on the Unmatch Transactions button above the list.

      The transactions from this match will then appear in the Unmatched sub-tab for you to reconcile correctly.

       

      FAQs

      Why is my Bank Account Balance and my FreshBooks Balance not matching? 

      If your Bank Account Balance does not match your real-time bank account’s balance, then:

      • Refresh your bank connection to make sure you have imported the latest transactions
      • Confirm that the Opening Balance was entered correctly - you can change your Opening Balance with the steps here

      If your FreshBooks Balance does not match your Bank Account Balance then:

      • Match or Mark As all the transactions on the left side of your Bank Rec until there are none left
      • Check for Journal Entries posted to the bank account - this will cause a difference as they will change the FreshBooks Balance but will not affect the Bank Account Balance
         


      How do I reconcile my online payment deposits and fees from WePay and/or Stripe?

      If you use FreshBooks Payments (WePay) and/or Stripe, payments are deposited into your bank account in batches. These deposits, along with your transaction fees, add up together to represent the total paid on your Invoices.

      Therefore, you can match each deposit Bank Transaction with the Invoice payments and transaction fee Expenses under FreshBooks Transactions together.

      To find out which Invoice payments are in your deposit, use the below steps to download a report from your payment gateway:

      WePay

      1. Log into your WePay account
      2. Click on Reporting
      3. Then select Settlements
      4. Choose the settlement you want the report for
      5. Click on theDownload CSV button, and you’ll receive an email within 5 minutes with a link to download the report.

      Stripe

      1. Log into your Stripe dashboard
      2. Click on Balance
      3. Then click on Transactions
      4. Next, click on Export in the top left corner
      5. Choose the date range as needed and click Export.


      How do I reconcile a loan or line of credit transaction?

      If the transaction is a Loan or Line of Credit (as explained here), first Mark as Transfer, which will move this transaction to Petty Cash in your Chart of Accounts. Then ask your invited Accountant to create a Journal Entry to record this as a Loan or Line of Credit in your books.
       



      I received a partial reimbursement/return on an Expense. How do I match this?

      Note: If you are exporting your Reports each month to close your books, we recommend using Journal Entries to accommodate for this reimbursement or return.

      Otherwise, if you do not export Reports to close your books each month, use the below steps:

      1. Edit the original Expense down to the new total after reimbursement
      2. Find the original matched expense and unmatch it with the steps in Viewing Matched Transactions above
      3. In the Unmatched section, you can now match the reimbursement from your Bank Transaction to the original matched expense.
      Bank Transactions FreshBooks Transactions
      Transaction 1: -$500 Expense 1: -$250
      Transaction 2: +$250  


      In this case, both the original Bank Transaction (originally - $500) and the new reimbursement Bank Transaction (+ $250) will now match up with the FreshBooks Transaction of (- $250).



      I refunded an Invoice payment partially/in full. How do I match this?

      Note: If you are exporting your Reports each month to close your books, we recommend using Journal Entries to accommodate for this reimbursement or return.

      Otherwise, if you do not export Reports to close your books each month, use the below steps:


      Full Invoice Refunds

      1. Find the original matched Invoice payment and unmatch it with the steps in Viewing Matched Transactions above
      2. In the Unmatched section, match the Invoice payment from your Bank Transaction with the refund from your Bank Transaction
      3. Then using the steps in Reconciling Transactions, create a $0 payment to match with the two Bank Transactions.
      Bank Transactions FreshBooks Transactions
      Transaction 1: +$800 Payment 1: +$0
      Transaction 2: -$800  


      In this case, both the original Bank Transaction (originally + $800) and the refund Bank Transaction (- $800) will now match up with the FreshBooks Transaction of ($0).


      Partial Invoice Refunds

      1. Edit the payment on the Invoice to reflect the partial refund.
      2. Find the original matched Invoice payment and unmatch it with the steps in Viewing Matched Transactions above
      3. In the Unmatched section, you can now match the partial refund from your Bank Transaction to the original matched Invoice payment.
      Bank Transactions FreshBooks Transactions
      Transaction 1: +$800 Payment 1: +$500
      Transaction 2: -$300  


      In this case, both the original Bank Transaction (originally + $800) and the partial refund Bank Transaction (- $300) will now match up with the FreshBooks Transaction of ($500).

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