Reconciling Uploaded Bank and Credit Card Transactions

In Chapter 4, Customizing QuickBooks for Your Business, we showed you how to connect bank and credit card accounts to QuickBooks Online (QBO) to reduce the amount of time you spend manually entering data. Reviewing these transactions will give you important insight into where you are spending your money. While many business owners can tell you who their top 5 customers are, they typically don’t know what their top 5 expenses are.

In this chapter, we will show you how to manage bank and credit card transactions that have been uploaded to QuickBooks. Dealing with fraudulent transactions has become a reality for many people. On more than one occasion, I received a call from my financial institution asking me to verify purchases that, for one reason or another, sent a red flag to my bank because they were “out of the norm” for me or made internationally. Reconciling your bank and credit card accounts often...

Overview of the Banking Center

The Banking Center is where you can manage bank and credit card transactions that have been uploaded into QuickBooks from your financial institution. These transactions require your review before they are recorded in your books.

At the very top of the page, you will see tiles that represent bank and credit card accounts you have added to QuickBooks. On each tile, you will find the name of the account, the current balance (per your financial institution), the current balance (per QuickBooks), and the number of transactions that require review before they can be recorded in a QuickBooks account register.

Follow these steps to navigate to the Banking Center:

1. Click on the Transactions tab, located on the left menu bar, and select Bank transactions, as indicated in Figure 9.1:

Figure 9.1: Navigating to the Banking Center

2. The Banking Center will appear, as indicated in Figure 9.2:

Figure 9.2: Bank and...

Matching transactions

In this section, we will cover a process called matching transactions. QuickBooks will automatically attempt to match transactions that have been uploaded into QuickBooks with transactions that have already been recorded in QuickBooks. This process can help you save the time you would normally have spent trying to match transactions manually. We will show you how this process works by going through examples.

In the For review tab, we can see that QuickBooks has attempted to match three transactions that were previously entered into QuickBooks:

Figure 9.4: Banking transactions in the For review tab

The following is a brief explanation of the preceding three transactions for which QuickBooks has found a match:

• Deposit for $868.15: QuickBooks has found a deposit in the file for $868.15 (dated 09/03/21), which matches a deposit the bank has uploaded to the Banking Center for $868.15. If these transactions are one and the same, simply click...

Editing banking transactions

When you first start adding banking transactions to QuickBooks, you will need to review each transaction to ensure it has a proper payee (vendor) or customer and account category assigned to it. As you begin to repeat transactions, QuickBooks will remember how a transaction was recorded previously, and it will automatically assign the payee (vendor) and account category for expenses. Be sure to verify that everything is correct before recording the transaction in QuickBooks.

Follow these steps to edit banking transactions in the Banking Center:

1. From the left menu bar, select Transactions and then Bank transactions, as indicated in Figure 9.6:

   

   Figure 9.6: Navigating to the Banking Center

2. Click on the For review tab, as indicated in Figure 9.7:

Figure 9.7: The For review tab in the Banking Center

3. Click anywhere within any of the banking transactions listed to make any necessary changes, as indicated...

Understanding bank rules

Bank rules are a list of conditions that must be met in order for QuickBooks to automatically assign a payee, account (category), class, and location to upload banking transactions to. Bank rules will apply only to bank or credit card transactions in the For review tab of the Banking Center. Since most businesses have the same transactions that take place month after month, using bank rules can save you the time you would have spent reviewing transactions in the Banking Center before they can be recorded in QuickBooks.

Follow these steps to create a bank rule:

1. Click on Transactions from the left menu and select Rules, as indicated in Figure 9.11:

Figure 9.11: Navigating to bank rules

2. Click on the New rule button, as indicated in Figure 9.12:

Figure 9.12: Creating a new bank rule

3. The following screen will appear:

Figure 9.13: Completing the fields required to create a new bank rule...

Reconciling accounts

Reconciling is the process of making sure your QuickBooks records agree with your bank and credit card statements. At a minimum, reconciling should take place on a monthly basis, if not more often. One of the benefits of using cloud-based accounting software such as QBO is that your banking information is uploaded on a daily basis. This means that you could reconcile as often as weekly, or even daily. There is no need to wait until the bank statement arrives at the end of the month to reconcile your accounts.

Follow these steps to reconcile a bank or credit card account:

1. From the gear icon, select Reconcile, as indicated in Figure 9.14:

Figure 9.14: Navigating to Reconcile in QBO

2. The Reconcile window will appear, as indicated in Figure 9.15:

Figure 9.15: Initial reconciliation window

3. If a transaction that was previously reconciled has been changed, QuickBooks will include a message on this screen...

Troubleshooting tips for reconciling bank and credit card accounts

There will be times when you might encounter an issue with reconciling your bank or credit card statements to QBO. If you are having trouble with getting to a $0.00 difference as shown in step 3 above, here are a few troubleshooting tips you can try:

1. Narrow the search down to the transaction type. To do this, compare the total withdrawals on the bank/credit card statement to the total payments in the reconciliation window, as shown below:

Figure 9.20: Reviewing total payments and total deposits

2. If they do not match, there is an issue with a payment (withdrawal). Do the same comparison for the deposits. Compare the total deposits on the bank statement to the deposits shown in the reconciliation window. If they do not match, you have an issue with deposits.
3. If you discover that you are out of balance for both the payments (withdrawals) and the deposits, tackle them separately...

Summary

In this chapter, we have discussed how to manage uploaded bank and credit card transactions. You have learned how to match uploaded transactions with transactions previously recorded in QuickBooks. You now know how to make changes to transactions so that the correct payee and category (account) are recorded. You have also learned how to create bank rules in order to reduce the number of transactions you need to review in the Banking Center, which will save you time. Finally, you understand the importance of reconciling bank and credit card accounts on a frequent basis to ensure your records are in sync with your financial institution.

We have met our goal of giving you the knowledge to successfully manage your uploaded bank and credit card transactions. Having this knowledge will help you to save the time you would normally have spent manually entering bank and credit card transactions into QuickBooks.

Reconciling your accounts will also help you become familiar with...