Openbravo QuickStart 2User Manual

Chapter 3 – Financial Accountto Reconciliation

v2.0.2

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Introduction ....................................................................................... 1Abstract Business Process .................................................................. 2Roles Involved .................................................................................... 2Configuration ...................................................................................... 2

Financial Accounts .............................................................................. 2Step by Step ....................................................................................... 4

Register Financial Account Transactions................................................. 4Read Bank Statement ......................................................................... 8Reconcile........................................................................................... 8

Accounting........................................................................................ 10Configuration of Financial Account Accounts ..........................................10Configuration of Payment Methods.......................................................12Accounting Entries.............................................................................14

Introduction

This process manages:1. The reconciliation of financial account transactions through a bank statement:

◦ Receive a bank statement (paper or electronic).◦ Using the application, reconcile transactions within the system marked as

deposited/withdrawn not cleared with the actual ones indicated by the bankstatement. This process can be done manually using "Reconcile" option (oneby one through the manual form) or using "Match Using Imported BankStatement" (Globally using a matching algorithm).

2. The reconciliation of financial account transactions manually for a cash:◦ Close petty cash transactions◦ Using the application, reconcile transactions within the system marked as

deposited/withdrawn not cleared with the actual ones entering a cashdifference when needed. This process can be done manually using"Reconcile" option (one by one through the manual form)

Keep in mind that some processes like creating the invoices that are the origin of paymentsare not described here.

Abstract Business Process

The abstract Financial Account to Reconciliation is defined by the following business processdiagram:

It consists of the following sub processes:• Read/Import Bank Statement or Cash• Compare to ERP Records• Reconcile(using automatic feature with the algorithm or manually through the

form).

Roles Involved

The roles required to complete this process are:• Finance - this role fully manages banks, accounts and the bank statements

Configuration

The Finance role should be used.

Before this process can be fully completed, the following elements need to be configured:• Financial Accounts with the underlying accounting• Matching Algorithm• Bank File Format

Financial Accounts

To create a Financial Account as well as configure the chart of accounts behind them, usethe Financial Management || Receivables and Payables || Transactions || FinancialAccount window:

Bank information. Fields to note:• Type - Selecting between Bank and Cash.• Business Partner - a Financial Account should also link to a business partner (a

vendor in this case) since the bank is a provider of services for which you arecharged (fees). For each new bank, a new business partner (vendor) should also beopened.

• Bank Code - first four digits of the bank account number that uniquely identify abank (Spain)

• Branch Code - second four digits that uniquely identify a specific branch of thebank (Spain)

• Control Digit - the ninth digit that serves as a control digit (Spain)

Account information. Fields to note:• Currency - currency of the bank account• Control Digit - tenth digit of the account number (Spain)• Partial Account Number - Last ten digits of the account number (Spain)• Account No. - full account number in a generic format. Used when a bank does not

use the IBAN format.• IBAN - Unique international account identifier according to the IBAN standard.

Additional field to note:• Matching Algorithm: Algorithm selected for Matching Using Bank Statement

feature. Standard algorithm is provided as default one to be selected by APRModule. Any other algorithm can be provided through a module so that it perfectlymanages the bank statement matching.

Accounting History is the tab where all the accounting entries related to transactions ofthe given financial account are displayed.

Accounting configuration is automatically inherited from the [Default] tab of theAccounting Schema window. Please review this configuration and adjust it according tothe laws and needs of the specific country and company. See the Accounting section of thismanual.

Step by Step

Register Financial Account Transactions

The Finance role should be used.

To create a Financial Account as well as configure the chart of accounts behind them, usethe Financial Management || Receivables and Payables || Transactions || FinancialAccount window tab Transactions:

Transactions can be added by pressing Add Transaction button (at bottom) which willbring up a new window used to present payments (receivables and/or payables) that can beselected as new transactions in the given Financial Account:

If payments are not yet present in the ERP, they can be created by pressing Add Paymentbutton.

Lets notice that as well transactions using GL Items can be added through Add Transactionbutton:

In the same way Bank fees can be added as transactions using Add Transaction button:

Read Bank Statement

The Finance role should be used.

A bank statement is normally received in a paper or electronic format. Regardless, it is a listof outgoing and incoming payment transactions that your bank has recorded. BankStatements can be imported in an electronic format using one of the existing Bank FileFormats. All those Formats can be deployed through modules into the system . SeeCuaderno 43 for Spain (Commercial).Import of Bank File can be done through Import Bank Statement button insideTransactions tab.

Choose the Bank File to imported and select the proper File Format from the onesavailable (Previously installed). Press OK button

Reconcile

The Finance role should be used.

The objective of this step is to match the lines of the statement you received from the bankwith the list of transactions that the Openbravo ERP application has recorded as not cleared.

To do so, two different approaches can be taken:

1. Use Reconcile button inside Transactions tab. Enter the ending balance of thebank statement or petty cash, and flag or create the transactions to meet thatamount:

2. Use Match Using Imported Bank Statement button inside Transactions tab.The matching algorithm will try to map existing transactions in the financial acount with

the ones coming from the Bank Statement. matches can be:

1. Strong: System has found a full match.2. Weak: Almost all the info coming from Bank Statement matches the existing

transaction. System proposes that transaction as a match but user has to clearit manually.

This way, payments that have been checked off will be included in this reconciliation. Youcan repeat the process of clicking the Save button as many times as necessary to includeall necessary payments in the Reconciliation.Once all the pending lines of the bank statement have been matched the reconciliation canbe processed by clicking on Reconcile button.

Once the Reconciliation has been processed payment statuses move to Cleared.

Accounting

Configuration of Financial Account Accounts

The Company Admin role should be used.

Upon creating a new bank account, the system automatically assigns its accounting basedon the defaults configured inside the Financial Management || Accounting || Setup ||Accounting Schema window, [Default] tab:

These accounting settings can be modified per individual financial account. To do so, use theFinancial Management || Receivables and Payables || Transactions || FinancialAccount, window and see the [Accounting Configuration] tab:

The Finance role should be used.

Here is the explanation of these accounting fields:• Bank Fee Account - Account used to post the commissions or minimum amount

differences to as explained earlier.• Bank Revaluation Gain Account - Account used to post the currency conversion

gains to.

• Bank Revaluation Loss Account - Account used to post the currency conversionlosses to.

• Payment out:▪ In Transit Payment Account - Transitional account used to post

to upon completion of each financial account transaction.▪ Withdrawal Payment Account - Account used upon each

outgoing transaction for a financial account.▪ Cleared Payment Account -Account used upon each outgoing

transaction reconciliation for a financial account.• Payment In:

▪ In Transit Payment Account - Transitional account used to postto upon completion of each financial statement.

▪ Deposited Payment Account - Account used upon each incomingtransaction for a financial account.

▪ Cleared Payment Account -Account used upon each incomingtransaction reconciliation for a financial account.

Once the defaults and the individual bank accounts are configured according to nationalaccounting laws, the postings of a Bank Statement are as follows:

Configuration of Payment Methods

These Payment Method settings can be modified per individual financial account. To do so,use the Financial Management || Receivables and Payables || Transactions ||Financial Account, window and see the [Payment Method] tab:

The Finance role should be used.

When adding a new payment method to a financial account system assigns the defaultconfiguration defined for that given payment method. Those default values can beoverwritten for each financial account.

Here is the explanation of the main fields:

• Payment In:▪ Allowed - Indicates whether this payment method is

allowed for receiving payments in the given financialaccount. Once a payment method allows payment intransactions the rest of configuration values are displayed.

▪ Automatic Receipt - When flagged system automaticallygenerates a received payment transaction when the SalesInvoice is processed for the given pair of payment methodand financial account (taken from customer tab).

▪ Automatic Deposit - When flagged system automaticallygenerates a financial account transaction once a ReceivePayment document is processed, moving its status fromPayment Received to Payment Deposited Not Cleared.

▪ Execution Type - Drives the way a payment is executed.When Manual is selected, system assumes that theexecution of the payment will be done manually outside OBapplication. Execution processes (such as electronicinstructions for the bank to collect or pay an amount) can bedeployed through modules.

▪ Upon Receipt Use - Account to be used as target accountfor posting of Received Payment transactions.

▪ Upon Deposit Use - Account to be used as target accountfor posting of Financial Account Deposit transactions.

▪ Upon Clearing Use - Account to be used as target accountfor posting of Financial Account Reconciliationtransactions.

• Payment out:▪ Allowed - Indicates whether this payment method is

allowed for making payments against the given financialaccount. Once a payment method allows payment outtransactions the rest of configuration values are displayed.

▪ Automatic Payment - When flagged system automaticallygenerates a make payment transaction when the PurchaseInvoice is processed for the given pair of payment methodand financial account (taken from vendor tab).

▪ Automatic Withdrawn - When flagged systemautomatically generates a financial account transaction oncea Make Payment document is processed, moving its statusfrom Payment Made to Payment Withdrawn NotCleared.

▪ Execution Type - Drives the way a payment is executed.When Automatic is selected, system displays additionalfields to be configured:

• Execution Process - Business logic applied to a payment to bemade. Additional modules can be installed to provide additionalbusiness logics for payment execution (Example: Printing of a checkin a given format).

• Deferred - When flagged, system assumes that the execution eventwill be manually launched. When unflagged system automaticallytriggers the execution process at processing time.

▪ Upon Payment Use - Account to be used as target accountfor posting of Make Payment transactions.

▪ Upon Withdrawal Use - Account to be used as targetaccount for posting of Financial Account Withdrawntransactions.

▪ Upon Clearing Use - Account to be used as target accountfor posting of Financial Account Reconciliationtransactions.

Accounting Entries

From now on the accounting configuration allows to decide when you want to recognize thereceived amount in the Bank or Cash Account.Now system can be configured in such a way that user can decide which account to be usedin each of the steps of the paymentcycle (Receipt/Made - Deposited/Withdrawn - Cleared/Reconciled). This will allow user todecide wether they want to use an intermediate account or not for the bookings and alsowhen they want to recognize the bank or cash asset.

General ledger posting of the Payment Receipt (Using Upon receipt use "In Transit PaymentAccount"):

General ledger posting of the Payment Receipt (Using Upon receipt use "Deposited PaymentAccount"):

There is even a third account (clearing Account) that can be defined so that every step inthe flow can generate its own accounting entry. Accounting can be configured to decidewhich steps will generate accounting and which accountswill be used in each of the steps. User can decide whether the payment event generatesaccounting or not, whether financial account transaction recognition event generatesaccounting or not and whether Reconciliation events generatesaccounting or not and as well which account will be used for each event. This configurationcan be defined per financial account and payment method as we saw in last section.Whenever a event is disabled for accounting the document will show the following messagewhen trying to post it: