Reasons for a Discrepancy in the Treasury or Bank Account Balance

The treasury or bank account balance in the system represents the total of the transactions recorded on it, including receipts, payments, and transfers. When reconciling this balance against the actual cash or the bank statement, a discrepancy may appear — a shortage if the actual amount is less than what’s recorded, or a surplus if it’s more. This guide explains the common reasons for this discrepancy and how to trace it.

Reasons Related to Recording Payments

• Recording a payment with “Completed” status before the amount has actually been collected, causing the recorded balance to exceed the actual amount. This is common with checks and bank transfers that haven’t been recorded yet.
• Collecting an amount from a client without recording a corresponding payment, causing the recorded balance to be less than the actual amount.
• Recording the payment on a treasury other than the one the amount was actually received into.
• Linking a payment method to the wrong treasury in the settings, causing transactions to be automatically directed to a different treasury.

Reasons Related to Transfers Between Treasuries

• The transfer date differs from the date it was actually executed, causing a discrepancy to appear when reconciling for a specific period.
• Recording the transfer twice.

Reasons Related to Expenses and Income

• Disbursing cash amounts from the treasury without recording them as an expense.
• Not recording payment method or bank fees and commissions as an expense, causing the amount actually deposited to be less than what’s recorded in the system.
• Recording an expense or income on a treasury other than the one it actually affects.

Reasons Related to Balance and Settings

• Not recording the treasury’s opening balance when creating it or recording it twice.
• Exchange rate differences in multi-currency treasuries when comparing against another currency.

Reasons Related to Editing and Deletion

• Editing an invoice’s or a payment’s value after it’s been recorded.
• Deleting a payment or restoring it from the recycle bin.
• Editing a transaction’s date after a previous reconciliation has been completed.

Steps to Trace the Discrepancy

1. Click on “Finance” from the sidebar menu, then click “Treasuries & Bank Accounts.”
2. Open the treasury or bank account you want to review and browse its transactions for the required period.
3. Compare the system’s balance against the actual cash or the bank statement for the same period and determine the discrepancy’s value.
4. Review the payments recorded during the period and make sure that those with “Completed” status have actually been collected.
5. Review the transfers between treasuries and make sure each transfer appears in both treasuries.
6. Review the expenses and income recorded on the treasury and make sure bank fees and commissions have been recorded.
7. Open the Activity Log and filter the results by period and employee to detect any edits or deletions made to invoices, payments, or transfers.

Important Notes

• The most common cause of a discrepancy is using the “Completed” status for a payment whose corresponding funds haven’t arrived yet. See the “Payment Status Types and the Difference Between Them” article to determine the appropriate status for each transaction.
• The discrepancy may arise from a date mismatch rather than an actual shortfall, so always make sure the time period matches on both sides before considering the discrepancy a real shortage.
• Periodic treasury reconciliation — weekly or monthly — makes it much easier to detect the source of a discrepancy than reviewing a long period all at once.