Wednesday, July 22, 2015

Dynamics GP - Cashbook Bank Management (CBM) vs. Electronic Bank Management (EBM) vs. Bank Reconciliation (BR)

I have been doing a fair bit of explanation around Cashbook Management and Bank Reconciliation modules in GP over the past few weeks. I found the explanation from Brian Wick below was pretty good. To add on to his excellent explanation – here are a few additional items -

Cashbook Management -

  • Cashbook has support for more Multicurrency transactions. They can do bank transfers in as many as four currencies at the same time for instance whereas Bank Rec allows just two
  • Easier to track Tax with Bank Transactions (However, you should typically be using AR/AP modules in GP and let tax flow from there) . I’ve heard the argument from some customers that they have been told that this is the only way to track tax when accounting for GST or VAT. That is NOT correct! 
  • Support for more transaction types such as GL Checks and RM Checks with don't really have a counterpart in the Ban Rec product
  • No eConnect Import Interface

Bank Reconciliation

  • More commonly Used, better and easier to support 
  • Works well and meets most requirements other than the 4 currency bank transfer requirement discussed above.
  • Has eConnect Import Interface

Cashbook Bank Management (CBM) vs. Electronic Bank Management (EBM) vs. Bank Reconciliation (BR)

(Bank Management (BM) refers to both CBM and EBM)

The major difference between Bank Management and the Bank Reconciliation is that the Bank Reconciliation receives most of it transactions from other modules. Debtors and creditors cash transactions are captured in RM and PM and Bank Reconciliation is updated accordingly.

You can capture all your cash transactions in Bank Management and RM, PM and GL will be updated accordingly. The windows updated in Great Plains are RM Cash Receipts, RM Transaction Entry (payments to debtors), PM Manual Payments, PM Transaction Entry (receipts from creditors) and GL General Entry.

However in the CBM transactions captured in PM transaction entry, RM transaction entry, SOP, invoicing and PM computer cheques also update CBM in the same way that Bank Reconciliation is updated.

The reconcile functions in CBM and Bank Reconciliation are very similar so the major difference between CBM and Bank Reconciliation is that Bank Reconciliation receives transactions from other modules and Bank Management is a single point of entry for all cash transactions. All other differences are in functionality: Batch processing, full multicurrency, Electronic Reconcile Management (Auto Bank Recon), Intercompany Payments and Deposits, Intercompany many to many Bank Transfers, Payments to Debtors and Receipts to Creditors ext.

The difference between the CBM/Bank Reconcile and EBM is due to the fact that in EBM you do not have any source documents (Cheque counterfoils, Deposit slips ext.) as 90% of the transactions are done via electronic transfer. So the first time we find out about a transaction is when it appears on the bank statement.

In CBM and Bank Reconciliation we capture our transactions from source documents (Cheque counterfoils and deposit slips) and then reconcile the transactions that are on the bank statement to the transactions that we have already captured.

In EBM we capture our transactions from the bank statement and then post the transactions to RM, PM and GL. As the source document is the bank statement there is no need to do a separate reconcile so the post and the reconcile is one process.

In EBM we do however allow for transaction that originate form counterfoils and deposit slips. When this happens the user will capture these transactions in RM and PM but instead of posting to the Bank Account the transactions will post to a Holding account. When the transactions appear on the Bank Statement they will be captured as normal and then matched to the original transactions in the Holding Account. Regardless of the type of the transaction (GL, AP or AR) EBM will create GL transactions moving the money from the Holding account to the Bank Account. Thus the Bank Account will only be affected by transactions that have appeared on a bank statement. By doing this the Bank Account will always have a true balance.

So the difference between CBM/Bank Reconcile and EBM is that CBM/Bank Reconcile are driven by source documents and EBM is driven by the Bank Statement.

Best regards,
Brian Wick
Partner Online Technical Community