Cash Management Diagnostics

Basics

When balancing Cash Management, it is useful to take a Divide and Conquer approach. Start by isolating the three main balances:

• Beginning Balance

This is the sum of all previous reconciled transactions

• Cleared Total

This is the Beginning balance plus all Cleared transactions

• Current Balance

This is all transactions, Reconciled, Cleared and Outstanding

In a Balanced Cash Management System:

Cleared Total = Beginning Balance + Cleared Items
Cleared Total = Bank Balance
Current Balance = Cleared Total + Outstanding Items
Current Balance = G/L Balance

Terminology:

Outstanding Items=Open Items
Current Balance=Ending Balance

Beginning Balance

The beginning balance should match the previous months ending balance, and therefore this months beginning balance. If this is not the case then this problem will need to be fixed first.

Cleared Total

The cleared total should match the Bank's ending balance.

If the beginning balance is correct, and the cleared total is incorrect, then we are looking at a problem with cleared transactions for the month.

Run the Cleared Transaction report:

• Cleared Flag Checked
• Open Flag Unchecked
• Select the approriate Cash Account
• Select Date Range from 1/1/1990 to End of month to reconcile

Current Balance

The Current Balance should match the General Ledger system. This of course assumes that both the G/L and C/M are setup correctly.

If the G/L and C/M systems do not match, Verify that both systems were setup correctly. If they have never matched up, then start with proper setup.

Assuming that the systems previously matched, and the beginning balance and cleared balance look good here are some possible Diagnostic Steps:

• Run Cleared Transaction Report set for Open Transactions
  • Open Flag Checked
  • Cleared Flag Unchecked
  • Select the approriate Cash Account
  • Select Date Range from 1/1/1990 to End of month to reconcile
• Check for transactions that hit G/L from outside of Cash Management

See Also

Cash Management Diagnostic Queries