Reconciliation is an optional accounting process that enables you to compare your actual, real world bank balances with the balances in REI Hub. Reconciliation assists in identifying any discrepancies and confirming that your records are complete, accurate, and reliable. Many real estate investors reconcile their accounts on a monthly basis, but any time period can be selected.
Some key takeaways from this article:
- Reconciliation lets you confirm that your real world bank balances align with the balances in your accounting software
- Only reconcile an account after you have booked (not ignored) all transactions in the time period and think everything is accurate
- Reconciliation only looks at account balances; it does not help identify incorrectly categorized transactions (e.g. a Loan Payment inadvertently booked as an Expense)
How to perform a reconciliation in REI Hub:
1) Prior to running the reconciliation:
- Determine the bank account or credit card and date range you wish to reconcile
- Ensure that all transactions have been booked (and not Ignored) for that account and date range
- Pull a bank statement for the desired time period showing starting balance, ending balance, and transactions
2) Navigate to the Banking page, and click on the name of the account you are reconciling.
3) Click on Reconcile Account
4) Enter the statement Start Date and End Date
5) Enter the Statement Starting Balance
If the Statement Starting Balance matches the balance in REI Hub, you will immediately go to the next step and be asked to enter in the Statement Closing Balance.
If the Statement Starting Balance does NOT match the balance in REI Hub, the system will notify you and present the Statement Starting Balance and the total balance in REI Hub. In order to address the discrepancy, you may need to exit the current reconciliation process so that you can reconcile an earlier period or look further into the computed balance in REI Hub.
Optionally, you can choose to automatically add an adjusting journal entry so that the balance in REI Hub matches the Statement Starting Balance. You can also choose to proceed with the current reconciliation without addressing the balance discrepancy.
While these options are available, the best practice is to fix the discrepancy before proceeding with reconciliation.
7) Enter the statement Ending Balance
7) View the Balance Summary and choose which transactions to mark as reconciled.
By default all transactions in the statement period and earlier are included and checked to be reconciled. Unchecking a transaction will impact the Reconciled/ REI Hub balance. If a transaction is unchecked, it will not be considered reconciled at this time, and will be included in the next reconciliation.
When the balances match or you have included or excluded transactions to your satisfaction, click Save and Finish. This will complete the reconciliation process.
8) Reconciled transactions will now appear with an R on the bank register page
9) Contact us with any questions!