QuickBooks Online Banking feature not only allows you to easily track bank and credit card balances, but also saves a lot of time doing bank and credit card reconciliations. This feature allows users to update transactions in their account register for items that have cleared the bank. If used properly, it can be a great timesaver and cash management tool. If not used properly, it can be a source of frustration so let’s talk about how to make it work for you.
First, the “gotchas”
I do NOT recommend downloading transactions from your bank be used in lieu of entering transactions as they occur. This practice can easily result in bounced checks and makes managing cash flow impossible. QuickBooks will attempt to match transactions entered into QuickBooks by payee and amount. When an exact match is found the transaction is flagged as having cleared the bank automatically and that can make the process almost instantaneous. I enter credit card transactions from my receipts on a daily basis. I recently automatically matched thirty credit card transactions in the blink of an eye. I had neglected to record three transaction and these showed up to me manually entered and recorded as a matched. The whole process took me about one minute.
Be careful about the date range for transactions you select to download
Be careful when selecting the date range for cleared transactions to download. QuickBooks does not match against transactions that have been cleared in bank reconciliations. As a result, these will be included in a list of unmatched items, requiring that you manually identify them as previously cleared transactions and delete them from list of items to match.
- Always select a date range the day after the end of the last bank statement you have reconciled in QuickBooks.
- Avoid selecting an ending date range that is later than the ending date of your latest statement.
Watch out for erroneous booking of transactions matched by vendor naming rules
QuickBooks helps you by automatically match transactions in your register with downloaded cleared transactions, based on the amount, vendor name, and date. As you manually match remaining downloaded transactions, QuickBooks will apply new matching rules to improve matching on future transactions. For example, if you match a downloaded transaction with “Exxon Littlefield, TX” to the name “Exxon” in the vendor file, QuickBooks will automatically match on future downloaded transactions with the same amount and “Exxon” anywhere in the description. This works great, most of the time.
A problem occurs, however, when you use the same vendor for multiple type of purchases because QuickBooks assumes you will always be purchasing the same thing and will post a charge to the same accounts it matched on previously.
For example, I use Costco to purchase both gas and office supplies. QuickBooks assumes that, if it finds a match on vendor name on a transaction I neglected to enter in my books that the charge will always be for fuel.