Reconciliation
Reconciliation is an accounting practice in which two kinds of records can be
successfully
compared in order to check whether these records are proper and in agreement.
Reconciliation
is the right method to identify any inconsistencies between them. This method is
helpful for substantiating that the accounts in the general ledger are uniform,
precise, and complete.
In the case of Account Reconciliation, it will be beneficial to describe the difference
between two financial records or account balances. That means the system allows
you to ensure the money that drops from an account matches the money that is actually
spent. This adequate method is very comfortable for ascertaining that the balances
after each accounting period are equal. Little kinds of differences may be reasonably
caused by the time of payments and deposits. However, the unauthorized discrepancies
will be identified successfully. You can reconcile your records as a basis of daily,
monthly, or yearly.
In the Odoo platform, you can see both Payment Matching and Bank
Reconciliation.
These two methods are used for matching and reconciling entries. Let us discuss
each one below.
Payment Matching
In the Payment Matching method, the strategy applied is that the invoice created
or the bill created will be compared against customer payments or vendor payments.
As an example, suppose a customer invoice is created and registered payment from
the invoice. The payment matching will be performed automatically. However, when
the customer payment is added, the payment should match the invoice.
Bank Reconciliation
The Bank Reconciliation procedure is very effective for helping the user to match
an individual or an organization’s cash account information to bank details. Using
the comparing method, the bank reconciliation enables an organization to understand
whether there are any dissimilarities in the account. With these advanced advantages,
an organization will be able to obtain fast corrective actions if any variances
are found.
Bank reconciliation is to match the system payment entries with the bank
statement. As per the above example, the customer invoice is matched with the customer
payment. Now the next is to match with bank statements. There will be an entry in
the bank statement corresponding to the invoice. Now reconciling with the bank statement
will be termed as bank reconciliation.