How to Do a Bank Reconciliation in Business Central

Bank reconciliation is the control finance teams lean on most at month end. If the bank balance in Business Central matches the bank statement, and you can explain every outstanding item, the rest of the close becomes much easier to trust.

Business Central has capable reconciliation tools, but the screens, actions and import options are not obvious to people coming from Sage, Xero or QuickBooks. This guide walks through how reconciliation works in Business Central today, with every page and action name checked against Microsoft Learn, plus the problems we see most often when supporting UK finance teams.

What bank reconciliation means in Business Central

In Business Central, bank reconciliation checks that the entries recorded against a bank account match the transactions on your bank's statement. Pairing a statement line with one or more bank account ledger entries is called matching. Once everything is matched or explained, you post the reconciliation, and Business Central records the reconciled statement against the bank account.

Two kinds of record are involved:

• Bank statement lines: the transactions from your bank, either imported from a file or feed, or suggested from Business Central's own open entries.
• Bank account ledger entries: the entries Business Central has posted to the bank account, from payments, receipts, journals and so on.

Each bank account is linked to a G/L account through its Bank Acc. Posting Group. That link matters: the bank ledger and the general ledger should always agree, and when they do not, reconciliation is usually where you find out.

Bank Acc. Reconciliation page vs Payment Reconciliation Journal

Business Central offers two places to reconcile, and choosing the right one for each job saves a lot of time.

A common pattern for UK SMEs is to use the Payment Reconciliation Journal through the month to post customer receipts and supplier payments straight from the bank data, then run a Bank Acc. Reconciliation at month end to confirm the closing balance and review anything outstanding. Microsoft's guide to the journal is here: Reconcile payments using automatic application.

If you choose Post Payments Only in the journal, the payments are posted and applied but the bank account ledger entries stay open, so you still need to reconcile the account separately.

Getting bank statement data into Business Central

You can reconcile by keying statement lines, but importing them is faster and removes transcription errors. The options are:

File import (CSV and other formats)

The Import Bank Statement action accepts comma- or semicolon-delimited (.CSV) files. Use the Set up a bank statement file format assisted setup to describe your bank's export layout and attach it to the bank account. Behind the scenes, formats are held as Data Exchange Definitions, which support variable (delimited) text, fixed-width text, XML and JSON. Business Central includes a SEPA CAMT definition out of the box, which is useful if your bank can provide CAMT statement files. The format is linked through the Bank Statement Import Format field on the bank account card.

AMC Banking 365 Fundamentals

This Microsoft-documented extension connects to a service run by AMC Consult A/S that converts bank files into formats Business Central can import, and payment files into formats banks accept. It needs its own licence and service plan from AMC, and some business data is shared with that provider. See Microsoft's AMC Banking 365 Fundamentals guide. Check the supported UK bank formats and current pricing with AMC before relying on it.

Bank feeds

Business Central online includes the Envestnet Yodlee Bank Feeds service, but Microsoft states it is only supported in the United States and Canada.

For businesses that want live feeds, we usually assess AppSource options as part of a wider Business Central add-on review, rather than picking the first app that lists your bank.

Step by step: reconciling on the Bank Acc. Reconciliation page

This is the standard month-end routine, using the action names from Microsoft Learn's reconciliation guide.

Automatic matching, match rules and manual matching

Match Automatically

On the Bank Acc. Reconciliation page, Match Automatically compares statement text and amounts with ledger entries. The main setting is Transaction Date Tolerance (Days): the number of days either side of a ledger entry's posting date that Business Central will look for a matching statement date. Leave it at zero and only the exact posting date is considered. A tolerance of a few days usually picks up BACS payments and card settlements that clear after the posting date.

Automatic and manual matching can be mixed. Manual matches are not overwritten when you run automatic matching again. Entries matched on a different, unposted reconciliation appear in blue italics, which helps you spot when two people are working on the same account.

Payment Application Rules

In the Payment Reconciliation Journal, Apply Automatically follows the rules on the Payment Application Rules page. Each rule combines how well the related party matched, whether a document or external document number was found in the bank text, and how many open entries match the amount within tolerance. Rules carry a Match Confidence of Low, Medium or High and a Priority, and you can flag rules as Review Required. Details are in Microsoft's payment application rules guide.

For recurring payments with no invoice, such as bank charges or rent, use Map Text to Account. Future lines containing that text are applied to the chosen account and show a confidence of High - Text-to-Account Mapping.

The best way to improve automatic matching is upstream: ask customers to quote invoice numbers on remittances and make sure your own supplier payment references carry the document number.

Manual matching

Manual matching handles one-to-many and many-to-one cases. One statement line can be matched to several ledger entries, for example a customer paying three invoices in one transfer, and several statement lines can be matched to one ledger entry, for example a single deposit that the bank splits by card issuer. The Show Nonmatched, Show All and Show Reversed Entries filters keep the lists manageable on busy accounts.

Reconcile with Copilot

Business Central also offers bank reconciliation assist with Copilot. It runs after the standard automatic match, proposes further matches based on dates, amounts and descriptions, and can suggest G/L accounts for unmatched lines through Post difference to G/L account. Microsoft lists it as available in all countries, including in en-GB, and an administrator has to switch on the capability first. The Microsoft Learn page still labels it as a preview, so treat proposals as suggestions to review. See Reconcile bank accounts with Copilot.

Handling differences and unmatched lines

Anything that cannot be matched shows as a Difference. You cannot post while statement lines have differences, so work through them in three groups:

• In Business Central but not on the statement. Usually timing, such as a cheque not yet presented or a payment run dated on the last day of the month. Leave these as outstanding. A reconciliation can post with unmatched ledger entries; they carry forward.
• On the statement but not in Business Central. Bank charges, interest, direct debits nobody posted. Use Transfer to General Journal, complete the balancing account, post, then match.
• On both, but too different to match automatically. A mistyped amount, a different payer name or a short payment. Match manually and correct the underlying entry if it is wrong.

One restriction catches people out: you cannot post many-to-one matches that carry differences, even if those differences cancel each other out across lines. Post the differences first, then match them to the new entries.

In the Payment Reconciliation Journal, the equivalents are the Lines with Difference and Lines to Review actions, Apply Manually to change an application, and Transfer Difference to Account for lines with no matching document.

Posting, reviewing and undoing posted statements

Before posting, run the Test Report. It shows the statement ending balance, outstanding bank transactions, outstanding cheques, the sum of differences and the G/L account balance at the statement date. If the G/L balance and bank account balance disagree, look for direct postings or a G/L account shared by more than one bank account before you go any further.

Posting only takes in entries dated on or before the statement date. Later entries stay outstanding for next month. Once posted, the statement appears on the Bank Account Statement List, where you can print the Bank Account Statement report. Turn on Outstanding Entries to include items that were not reconciled at the time.

Business Central takes a snapshot of the header figures when you post, but the outstanding sections are looked up when the report runs. Microsoft notes the report can show inconsistent totals if you import or enter bank transactions dated in that period after posting. Save the report as a PDF at the time of posting for your month-end file.

Undoing a posted reconciliation

If you post a reconciliation in error, select it on the Bank Account Statement List and choose Undo. The entries return to an open reconciliation for you to correct and repost. Use Change Statement No. if you need to reuse the original statement number. Undo does not carry corrected balances forward, so you may need to adjust Balance Last Statement on later reconciliations.

Common problems and how to fix them

Getting this set up correctly from day one is part of any good Business Central finance implementation, and is much cheaper than unpicking months of direct postings later.

Good month-end practice for bank reconciliation

• Reconcile more often than monthly. Use the Payment Reconciliation Journal weekly, or daily for busy receipt accounts, so month end is a check rather than a clean-up.
• Reconcile every account. Include savings, credit card, foreign-currency and payment-provider clearing accounts, not just the main current account.
• Use the statement's own date and balance. Never adjust the ending balance to make a reconciliation post.
• Review old outstanding items. Anything older than an agreed threshold, such as 60 days, should be investigated, not carried forward indefinitely.
• Keep evidence. Save the Test Report and Bank Account Statement report with the bank statement, and record who prepared and who reviewed it.
• Separate duties where you can. The person who posts payments should not be the only person who reconciles the account.
• Close VAT on reconciled numbers. Reconcile the bank before preparing your VAT return. Our guide to Making Tax Digital in Business Central covers the VAT side.

If your team is new to these screens, a short session on reconciliation and the Payment Reconciliation Journal usually pays for itself in the first quarter. We cover both in our Business Central training for teams, and as part of wider Business Central partner services.

Frequently Asked Questions