Bank Reconciliation in TallyPrime: Step-by-Step Guide

Bank reconciliation is one of the most important periodic tasks for any business. It ensures that your company's books of account match the bank's records, helping you catch errors, unauthorized transactions, and timing differences before they snowball into bigger problems. TallyPrime offers multiple ways to perform bank reconciliation -- from manual matching to fully automated Connected Banking. This guide walks you through every method available.

What is Bank Reconciliation (BRS)?

A Bank Reconciliation Statement (BRS) is the process of comparing your company's bank ledger entries with the actual bank statement to identify and resolve differences. These differences typically arise from:

• Timing differences: Cheques issued but not yet cleared, or deposits in transit that the bank has not yet processed.
• Bank charges: Interest charges, service fees, or penalties debited by the bank that you have not yet recorded in your books.
• Errors: Wrong amounts, duplicate entries, or transactions recorded in the wrong account.
• Unauthorized transactions: Debits you did not initiate, which could indicate fraud or bank errors.

Regular reconciliation -- ideally monthly or weekly -- keeps your cash position accurate and your books audit-ready. With TallyPrime, this process has become significantly faster thanks to auto-reconciliation and Connected Banking features.

Setting Up BRS in TallyPrime

Before you can reconcile, you need a properly configured bank ledger. Here is how to set it up:

1. Go to Gateway of Tally > Create > Ledger.
2. Enter your bank name (e.g., "HDFC Bank - Current Account").
3. Under Group, select Bank Accounts.
4. Set "Set/Alter banking details" to Yes.
5. Enter the bank details:
   • Account Number: Your bank account number
   • IFSC Code: The branch IFSC code
   • Bank Name: The bank's official name
   • Branch Name: The branch where your account is held
6. Press Ctrl+A to save.

These banking details are essential for Connected Banking and auto-reconciliation. If you have existing bank ledgers without these details, you can update them by altering the ledger (Gateway > Alter > Ledger).

Manual Reconciliation

Manual reconciliation is the traditional method and works well for businesses with a manageable number of monthly transactions. Here is the step-by-step process:

1. Go to Gateway of Tally > Banking > Bank Reconciliation.
2. Select the bank ledger you want to reconcile.
3. TallyPrime displays all unreconciled transactions with columns for Date, Particulars, Amount, and Bank Date.
4. Compare each entry with your bank statement. For matched transactions, enter the Bank Date (the date the transaction cleared in the bank).
5. After matching all transactions, press Ctrl+A to save.

The BRS report will then show you the reconciled balance alongside the book balance, highlighting any remaining differences.

Auto-Reconciliation (Release 6.0+)

Starting with TallyPrime Release 6.0, auto-reconciliation dramatically speeds up the process by automatically matching book entries with bank statement entries. Here is how it works:

1. Import your bank statement: Go to Banking > Bank Reconciliation > select bank > press the Import button. TallyPrime accepts CSV, Excel, and PDF formats.
2. Column mapping: TallyPrime auto-detects common formats. If your bank uses a non-standard format, you can manually map columns (Date, Description, Debit, Credit, Balance) to TallyPrime fields.
3. Automatic matching: TallyPrime matches transactions where the amount and approximate date match exactly. These are marked as "Matched" automatically.
4. Potential matches: For transactions that are close but not exact matches (e.g., slight date differences), TallyPrime shows them as "Potential Matches" for your review.
5. Review and confirm: Accept the automatic matches, review potential matches, and manually handle any remaining unmatched entries.

Auto-reconciliation can cut your monthly reconciliation time from hours to minutes. For businesses processing hundreds of bank transactions monthly, this is a significant productivity gain.

Connected Banking for Automatic BRS

Connected Banking takes automation further by eliminating the need to manually download and import bank statements. Introduced in TallyPrime Release 6.0 and enhanced in subsequent releases, this feature connects TallyPrime directly to your bank account through Tally.NET.

Key capabilities of Connected Banking:

• Supports 145+ Indian banks: Including SBI, HDFC, ICICI, Axis, Kotak, and most regional banks.
• Real-time balance check: View your live bank balance directly within TallyPrime.
• Automatic statement retrieval: Bank statements are fetched directly without manual download.
• Seamless reconciliation: Combined with auto-reconciliation rules, most transactions are matched automatically.

To set up Connected Banking:

1. Ensure you have an active Tally.NET account (included with TSS subscription).
2. Go to Gateway of Tally > Banking > Connected Banking.
3. Select the bank account and follow the on-screen prompts to link it via your bank's authentication process.
4. Once linked, TallyPrime will automatically fetch statements and begin matching.

Want Mark IT's team to handle the Connected Banking setup? Our support specialists configure this for businesses across Mumbai every day.

Custom Matching Rules

Every business has unique transaction patterns. TallyPrime lets you create custom matching rules to handle your specific scenarios:

• Match by amount and date: The default rule. Transactions with the same amount and date (within a configurable tolerance) are matched.
• Match by reference number: If you record cheque numbers or transaction references in TallyPrime, the system can match using these identifiers for higher accuracy.
• Multi-transaction matching: A single bank entry (e.g., a consolidated deposit) can be matched against multiple book entries. This is common when you deposit multiple cheques together.
• Date tolerance: Set how many days of difference to allow between your book date and the bank clearing date. A 3-5 day tolerance works for most businesses.

Common Issues and Troubleshooting

Even with auto-reconciliation, some transactions need manual attention. Here are the most common issues and how to resolve them:

• Duplicate entries: If the same transaction appears twice in your books, reconciliation will fail for one of them. Delete the duplicate voucher and re-reconcile.
• Timing differences: Cheques issued near month-end may not clear until the next month. These will appear as unreconciled entries. Leave them and they will be matched when the next statement arrives.
• Bank charges not recorded: Banks debit service charges, SMS fees, and interest. Create journal entries or payment vouchers for these charges, then reconcile them.
• Amount mismatches: If a payment or receipt amount in your books differs from the bank statement (e.g., partial payment), you may need to split or correct the voucher.
• Foreign currency transactions: Exchange rate differences between the booking date and clearing date can cause mismatches. Use the payment integration features to handle multi-currency reconciliation.