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ZBA Bank Reconciliation Procedure

10/1/2014

Generally, divisions or subsidiaries of multi-location organizations use Zero Balance Accounts (ZBA) to make the best use of cash and credit lines.  ZBAs will automatically clear the balance to zero (or some nominal amount such as $5,000) by doing a daily transfer to/from the Corporate consolidating bank account (or Line of Credit).  The following illustrates an effective methodology for recording the ZBA sweep transactions and reconciling the appropriate bank accounts. 

Assumptions:
  1. Two ZBAs are setup.  One for Disbursements (A/P check clearing) and one for Deposits and other miscellaneous transactions including outbound wires and ACH/EFT.  There are many other combinations of accounts, but the following concepts remain the same.
  2. The Division/Subsidiary utilizes online bank reporting to access daily/weekly/monthly transactions without waiting for bank statements.
  3. The bank reconciliation process is completed as part of the month end process, preferably on the first day of month end.  Alternatively, it can be done weekly or daily.

Procedures:

  1. AR and AP Transactions:
  2. Sweep clearing and Bank Reconciliation.  This must be done every month, but can be done daily or weekly if desired. 

Posted by Paul Jackson, Senior Consultant, Epicor




 

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