Build the Reconciliation

The transactions that are shown are actually Journal Entry Lines. The system will show all Journal Entry lines that:

• match the chosen Account

• match the chosen Currency

• fall between the start date and end date

• have not already been reconciled

You will notice that the the lines are split up into 'Negative' and 'Positive' tabs to enable you to reconcile in two passes - for example, if you are reconciling a bank account, you can first reconcile deposits, then payments.

At this point you will probably go through your paper statement, matching each line to a line in Pakk. As you check the 'Reconciled' checkbox in Pakk, you'll notice that the 'total reconciled' field in the 'Totals' box will update, causing the the 'difference' field to also update. The 'difference' field is the most important subtotal to watch - this number represents the difference between the total of the lines you have reconciled and the amount the system expects you to reconcile as a result of the starting balance and ending balance you've entered. Here's a quick example:

• Starting balance: £1000

• Ending balance: £1500

• Net total to reconcile: £500

• Lines reconciled: Deposit £2000; Withdrawal £1700

• Net total reconciled: £300

• Difference: £200

In the above example, the reconciliation is still out of balance by £200. You would continue reconciling until the difference became zero, or in other words, the Reconciliation is in balance.

Edit/Enter Transactions

As you build the Reconciliation, you'll probably find that you need to go away from the Reconciliation in order to enter new transactions, or edit existing transactions, to make them sync up with the reality you are observing on your statement. This is no problem. You can 'Save' your Reconciliation at any time and come back to it when you are ready to continue. When you come back to an existing Reconciliation, you'll see the lines update to reflect any new lines you've entered on the system.

Viewing Reconciled Lines on Journal Entries

Also note that when viewing a Journal Entry (either manual or system created), you can see which lines have been reconciled and on what Reconciliation. Clicking on the name of the reconciliation will link you directly to that Reconciliation.

Reconciled Lines Cannot be Changed

Once a Journal Entry line has been reconciled, no changes can be made to that line - you can't change the amount, the date, or even delete that line.

For manually created Journal Entries, this restriction manifests itself in an obvious way - if you attempt to manually change the contents of a line that has already been reconciled, the system will flag this up and will not let you save.

For system created Journal Entries, the restriction operates indirectly, because it is the parent Transaction that determines the Journal Entry lines. This means that if you attempt to make changes to a Transaction that changes the underlying Journal Entry in a way such that a line that has already been reconciled changes, you will get the same 'This change affects lines that have already been reconciled...' warning.

Take a concrete example.

• A customer places and order and pays by direct bank transfer.

• The payment is entered on the Sales Order record.

• The system-generated Journal entry contains a line reflecting a positive entry against the bank account on the date of the payment.

• Sometime later, the person responsible for bookkeeping in the company reconciles the bank account, sees the incoming payment from the customer and marks it as reconciled.

• This has the effect of stating "this payment is no longer theoretical, it is reflected in the reality of the bank account".

• A few days later, a customer service representative is editing the customer's order to reflect something that has happened and mistakenly believes they should also edit the recorded customer payment to reflect this change.

• Since the payment on the order affects the underlying line in the Journal Entry which as already been reconciled, the system will not allow this and will show a warning when the user saves.

Keep this in mind: you can't change history. Reconciliations help ensure this maxim is enforced!