Reconciling Bank Transfers and Intercompany Transactions

The following instructions are useful in dealing with reconciling bank transfers between different Bank accounts.

1. Setting up a GL account for Funds in Transit or Transit Account (if required)

1. If not set up already, set up a transit GL account
2. Go to Lists > Accounting > Accounts
3. Click on New
4. Give the GL an appropriate name and number
5. The type will be Other Current Asset, this allows for it to take transactions on multiple currencies.
6. The Funds in Transit accounts should be excluded from revaluation in NetSuite, because transactions in different currencies will cause incorrect revaluations as they are not reconciled against each other at month end.

2. Reconciling the Payments

1. When reconciling the bank statement containing the sending transaction, select the account created in step 1, this will result in a journal entry crediting your bank account and debiting funds in transit
2. On the bank statement of the bank account receiving the funds, select the funds in transit account in the account column, this will result in a journal entry debiting your bank account and crediting funds in transit
3. Both transactions to the GL should be equal and opposite and the balance of the GL-account 'funds in transit' at 0 once both transactions are reconciled.

The following example describes the transactions created for a fund transfer in the subsidiary's base currency, from and to an account in the same subsidiary.

Transfer of funds with foreign currencies

1. Complete steps 1 and 2 above.
2. By default NetSuite will set the exchange rate on the journals created to the daily rate that was applicable on the day the transaction took place, resulting in an imbalance on the Funds in Transit account
3. Once both accounts have been reconciled, the exchange rate needs to be manually changed on either of the transactions to balance the amounts on the Funds in Transit account, or the exchange rate difference needs to be posted to a Foreign Exchange expense account manually.

The following example describes the transactions created for a fund transfer from a USD account to a GBP account in a EUR subsidiary.

These transactions will result in an Debit Balance of 5 EUR on the Funds in Transit account, because of the Forex difference. This needs to be resolved manually. This can be done by amending the exchange rate on the receiving transaction to match the amount in EUR on the Funds in Transit account (in this case that would be 1.6, so that 50 GBP recalculates to 80 EUR), alternatively an additional journal entry can be created to expense the Forex difference. This transaction would be as follows:

Because of the nature of these transactions and the fact that they can't be reconciled against each other on non-bank accounts, these accounts should be excluded from the month-end closing revaluation task as this would lead to incorrect recalculations of the balances on the funds in transit account. The following example describes the transactions created for a fund transfer from a USD account to a EUR account in a EUR subsidiary.

Due to FX difference a balance will remain on the Funds in Transit account. This can be adjusted by either opening the journal entry generated from the sending bank's statement and adjusting the exchange rate for it to match the amount received in EUR, or by creating an additional journal entry to set off the difference on the funds in transit account and post them to a FX Gain/Loss account.

Intercompany Transfers

1. For intercompany transactions you will need to setup a Intercompany clearing account rather than a Funds in Transit GL.
2. Otherwise it behaves the same as in the instructions above. 

The following example describes the transactions created for an intercompany fund transfer from a USD account in a USD to a EUR account in a EUR subsidiary.

Due to Forex difference a balance will remain on the Funds in Transit account. This can be adjusted by either opening the journal entry generated from the sending bank's statement and adjusting the exchange rate for it to match the amount received in EUR, or by creating an additional journal entry to set off the difference on the funds in transit account and post them to a Forex Gain/Loss account.

The clearing account should balance to zero after both bank statements have been posted. In case there should be elimination, the elimination journal should be created separately, outside the bank statement.