Recently a customer of ours needed to do their first ever reconcile of a credit card account in Kashflow. They just couldn't get it to work how they expected, here's where they were going wrong and how they fixed it...
They had successfully (automatically) imported all their transactions but then the problem they were experiencing was two fold:
- They struggled to get the initial balance set properly
- When trying to reconcile a month, the Left to Clear value was ending up as double the Total of Ticked Items value???
Here's the key thing they were missing...
The first thing to remember about credit cards is that the balance amounts (generally) are negative figures!!
This is primarily where the customer was going wrong. They had setup the reconciliations Target Balance as a positive number i.e. £500 rather than a negative number -£500. Once they figured out that it was actually a negative number it all fell into place.
Because this account was migrated from a different accounts package they also needed to to set-up an opening balance on the Credit Card for our example we will use -£500
Step 1 - Setup your Opening Balance
In Kashflow you have a number of different ways to set your accounts opening balance. Here's the recommended method using a Journal Entry.
What is a Journal? (a non-accountants view)
A Journal is a record on your accounts that allows you to move amounts from one code to another. In this specific example we want to move money from the Credit Card Account into a special temporary 'holding' account called a Suspense Account
A Suspense Account is an account used on a temporary basis for any transaction or balance that cannot be identified.
We assume at this point you have turned on Journalling in Kashflow, if you haven't and don't know how, check out their guide here.
Navigate to Journal and click [+ Create] and set;
- The date 01/01/2015
- The category Standard Journals
- Comment Barclaycard-0123 Opening Balance
- Template - [empty, journal]
And click Create Journal
In the next page, you have to add two entries that move the amount in question from the Barclaycard account into the Suspense Account.
First Row; Find the Barclaycard Account (yours might be named differently) in your Code drop down list. Leave the Debit field blank and change the Credit field to 500. You can also add a Narrative to remind yourself what this is about. e.g. "Opening Balance for Bob's Credit Card".
Second Row; Select the 9999 - Suspense Account for the code. Set Debit to 500 and leave Credit as blank.
Click [Save Changes]
Now you should be able to navigate to the Bank page and click Reconcile on the Credit Card account. Then create/resume a new reconciliation.
The start balance will be fixed at 0 (zero), so just set the End balance from your credit card statement Don't forget!! make sure you enter it as a minus number!
The End date will be your statement end date from the credit card company.
Once you are into the reconciliation page, you will find the first entry in there will be the Opening Balance journal transaction. Simply tick off the transactions as they appear on your statement and fingers crossed, you'll get the Left to clear value down to 0 in no time.