Reconciling the bank account

Reconciling the bank account

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During the year under review a client had about 1,500 sales transactions representing turnover of £270K.

Historically they had difficulties reconciling payments received in the bank to sales invoices. Part of the problem is they receive payments through SagePay and Paypal and there is no correlation between name of payee and the invoiced name. i.e. a personal account used to pay a corporate bill. They also tried to build their own accounting system which failed resulting in this mess.

There are approximately £20k worth of receipts in the bank as yet unallocated to customers and there are about £13k  of invoices marked as paid but not yet reconciled to the bank account. (staff sometimes marked the invoices as paid and sometime how it was paid). We have reconciled as much as we can but what is left is un-reconcilable – names, dates and amounts don’t match btw bank and invoices. Any allocation would be a guess at this stage.

I don’t envisage every being able to reconcile these remaining balances and would think that creating a suspense account to process these payments  - net the £20k off the 13K – adjust for any VAT and write of the balance to P&L i.e. unrecorded sales.

Any advice would be appreciated.

It’s the same for payments and creditors but the amounts are far smaller.

Replies (3)

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By johngroganjga
22nd May 2013 13:38

Receipts not a problem. 

Receipts not a problem.  Assume unidentified receipts are sales.

But with payments you'll have to assume that any (completely) unidentified payments are directors' drawings.

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By Accountsetc
22nd May 2013 13:52

Directors drawings

Thats the line i have taken with the client - its his business and he needs to take responsibility for expenses - no receipt and no idea = drawings and no VAT input claims.

 

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By The Limey
23rd May 2013 10:38

Well, if it's a limited company the directors appear not to have kept adequate accounting records...

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