Bank Statement Reconciliation in Odoo

In each Accounting software, there could potentially be many variations of doing bank statement reconciliation.

Bank statement reconciliation is a process to match the general ledger entries (credit or debit) to the corresponding amount in your bank statement. Depending on the transactions, for high volume, it could be done daily, weekly or monthly, by the Finance team.

Why is the bank statement reconciliation important?

• Detecting errors such as double payments, missed payments, calculation errors etc.

• Tracking and adding bank fees, interests and penalties in the bank statement to the system.

• Spot fraudulent transactions and theft.

• Tracking any cheque (deposited or issued) that are not cleared/bounced by the bank.

This blog is part of a series of the blogs to share my experience on how to enable the Odoo CE Accounting to be on par with any other Accounting software in the market.

• Read this blog on how to configure Profit & Loss and Balance Sheet Reports in the Odoo CE.

• Read this blog on how the Sales and Purchase process is impacting Odoo Accounting.

• Read this blog on how to enable the Free Odoo CE Accounting module.

• Read this blog on how to use Analytic Account and Analytic tags to keep track of business expenses, cost and profits, by project, cost center or department.

In Odoo Accounting, there are two stages for reconciliation.

1) Reconcile Payments against the invoices/bills.

a) Upon received your supplier invoice, paid it and you will record the payment against the corresponding vendor bill, and Odoo will mark the vendor bill as 'Paid'.

b) Upon received payment for your customer invoice, record the payment against the corresponding invoice, and Odoo will mark the invoice as 'Paid'.

This type of reconciliation is often more straight forward and similar in most of the Accounting software. When it comes to reconcile a single payment against multiple invoices or some invoices partially, in my opinion, standard Odoo way is seen as not intuitive enough.

There are other options in Odoo App Store that did a far neat way to do partial reconciliation, multiple invoices reconciliation or allow multiple journal reconciliation.

2) Reconcile Payments against the bank statements.

There is a contentious if the Odoo standard bank statement reconciliation is the most effective one, and it is the piece of function that get the most dislikes from the user.

In Odoo EE, integration to the bank to pull the bank statement automatically has definitely make it a time-saver, especially for large corporation with thousands of transactions. Having said that, the manual matching are often still required.

If that is not possible due to various reasons, manual creation/upload of the bank statement for reconciliation often seen as too time-consuming, and especially hard for SME users that were get used to other Accounting software way of simplified reconciliation, as in the example below.

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Each country has its own way of doing banking reconciliation, and there is no absolute right or wrong. There are many apps in the Odoo app store that provide alternatives to the standard Odoo bank reconciliation, which typically create a bank statement from the existing Odoo payment journal entries, rather than creating a fresh new bank statement (manual or automatic), as in the standard Odoo. Having said that, these apps are still lack of the following features.

There is a OCA Bank Account Reconciliation that comes close to the requirements, but required some minor fixes for bugs and enhancements, to be useful.

Bank Reconciliation - Nice to Have Features:

• Starting balance and ending balance of the month in the statement to help to detect any duplicate transactions, fraud and discrepancies. Ending balance of the last month will be the starting balance of the next month statement.

• A person to prepare bank statement reconciliation and an approver to verify it.

• Bank statement report (pdf) to show the unpresented cheques and deposits not credited by bank.

• Full support for multi-currencies bank accounts.

a) In each month end or beginning of the month, accounting user can create a new bank statement for a specific bank and month.

b) User will enter the starting balance, ending balance (from the bank statement) and ending date.

c) Select (tick) any credit (received invoice payment) and debit (pay vendor bill) that matched to the bank statement, until the difference is zero.

d) Send for approval and print the bank reconciliation statement.

e) Once approved, the customer and vendor payments will have a status "reconciled".

See the following screenshots for what may be enhanced to be on par with other Accounting software in the market.

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