Resolving Uncleared Transactions

The article addresses the tracking of any bank or credit card activity that has been posted into your bookkeeping system but did not clear your bank or credit card accounts. In other words, posted transactions in your bookkeeping system that cannot be matched to any bank or credit card monthly closing statements.

Here are some things to consider when dealing with posted transactions that have not been yet matched to bank or credit card closing statements:

• How long has the posted transaction remained uncleared or unreconciled?
• What is your plan if any posted transactions can never be matched?
  • How long will you wait?
  • Do you need to contact a 3^rd party if, for example, a check still has not been cashed?
  • Do you file tax returns either by cash or accrual basis in your books?

Sometimes a check-paid vendor may not cash their check payment for weeks or even months. In this case, you should contact the vendor to be sure they even received the check payment and when they plan on depositing it into their bank account. A lost check payment will mean you have to contact your bank and have them void the check payment. Then you will have to re-issue another. This can be a time-consuming process as you will need to recognize all of this in your books; and if all of this crosses different calendar years, then there could be tax implications as well.

Reconciling all bank and credit card accounts should be completed at least on a monthly or quarterly basis, depending on the amount of activity there is to consider.

Also, please keep in mind, that you will have to consider whether you recognize your financial activity either by cash-basis only, or accrual basis. For example, if you post a vendor bill in December but pay it in January, you will recognize the billed expense in December under an accrual basis system. Otherwise, you will recognize the billed expense in January under a cash-basis (when you paid it) system.

Credit card transactions are easier to deal with because credit card activity is always dated in your books as the credit card charge events happen and not when the credit card company bills you (Keep in mind though the posted vs. transaction date of credit card charges).

In a future article, I will discuss different ways of handling and resolving posted transactions that will never reconcile to any closing statement.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.