The Bank Explain screen provides a variety of methods to explain bank transactions. This screen can be accessed with two methods, either by explaining transactions from an imported bank statement or by manually processing Money in/out.
Method 1. Imported Statements
There are three ways of creating an imported bank statement:
Method 2. Manage money (money in/out/transfer)
To do so, you must head to Money > Bank Accounts > Select Money in/out or Transfer. This will allow you to explain any payments, receipts or transfers by filling out the required fields.
What can you use the explain screen for?
Creating REC/PAY invoices
Linking receipts/payments to unpaid invoices/bills
Reconciling receipts/payments with paid invoices/bills
Creating unallocated cash
Creating INV/PUR invoices with different payment dates
1. Create a PAY (payment) or REC (receipt)
An REC or PAY prefixed invoice is a paid transaction which can only be created via the bank explain screen. These type of transactions are mainly used when a sales invoice or purchase invoice document has not been issued. If you have issued invoices or plan to, please see process 2 to find out how to allocate payments.
On the bank explain screen, when explaining a transaction, you must select the relevant entity, account code and VAT rate in the dropdowns provided. Once this has been completed, you can then proceed to click Add New Transaction.
2. Allocate transaction to an existing unpaid invoice/bill
Unpaid invoices/ bills are created on the sales/purchases menu and have the prefix INV/PUR by default. You can use the bank explain screen to allocate receipts/payments to multiple invoices or to part pay an invoice.
On the bank explain screen, by selecting the relevant entity in the dropdown, the system will then pull up all outstanding invoices and bills depending on whether the transaction is a receipt or payment. You can then proceed to click Allocate to Existing Invoice in which the transaction relates to.
Please note: If the transaction relates to multiple invoices, you must click the Allocate to existing invoices button for each individual invoice. The selected invoices will then be presented in a table where you are able to review them before clicking the Add Transactions button to finalise the allocation, as shown below.
Likewise, you can allocate a receipt to an invoice and any additional transaction fee. To do so, you must explain the transaction fee as a negative amount, which will increase the receipt amount, where you can then explain the remainder to the outstanding invoice.
3. Reconcile a paid invoice/bill
Again, within the Bank Explain screen, if you are explaining a transaction with an amount that matches a paid invoice of the same amount, you will have the option to click Reconcile to mark this as reconciled on the Bank Account balance screen.
Please note: Some limitations of this are that you cannot reconcile a part payment allocated to an invoice and you cannot use the form to reconcile a payment allocated to multiple invoices.
4. Creating unallocated cash
When explaining transactions, by using the account code Trade Debtors or Trade Creditors, you can explain a receipt/ payment as unallocated cash.
Please note: you must tick the Show in Sales/ Purchases checkbox respectively for the Trade Debtors and Trade Creditors account codes which can be found in Settings > Accounting > Account Codes.
Unallocated cash can then be allocated to future invoices from the Money > Bank accounts > Unallocated cash menu using the Allocate icon.
5. Creating INV/PUR invoices with different invoice date to payment
You can create an INV/PUR invoice from the transaction form with a future/past invoice date by changing the bill/invoice date field.
You can use the transfer tab to explain a payment or receipt as a transfer to/ from another of your bank accounts.
Use the form on the refund tab to explain a payment or receipt as a refund from a customer or supplier.
8. Bank Charges
Select transaction and enter a negative value equal to the bank charge you were charged. Code this to Bank Charges and then select the bank as the entity. Add this as a new transaction and then the value of the transaction should be equal to the amount prior to the bank charge. This can now be allocated to an invoice or bill as required.
Lastly, to further streamline the process of explaining recurring transactions, you can set up bank import rules and bulk explain transactions.
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