How to Balance Accounts Payable in Microsoft Dynamics
Accountants using the accrual basis method record invoices for future payment by debiting expense and crediting accounts payable (AP) trade in the general ledger. They can view a list of open invoices at any time by printing an aging report in the AP module. Because AP transactions are recorded in both the AP module and the general ledger (GL), discrepancies sometimes occur. Periodically, accountants compare the balance between the AP aging and the AP trade GL account. They have traditionally performed this reconciliation manually, but Microsoft Dynamics has a utility that assists with the reconciliation of AP.
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Instructions
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Print the Historical Aged Trial Balance report in the Reports section of the Purchasing module. Make sure that the Print/Age as Of date is the date at which you are balancing AP.
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Print the Trial Balance--Summary report in the Reports section of the Financial module. Select the date range, making sure the end date is the date at which you are balancing AP. Select any account range as long as it includes the AP trade account.
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Compare the total on the AP aging with the balance of the AP trade GL account. The balances should be equal. If they are, no further action is necessary. If they aren't, proceed with the reconciliation process.
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Select "Reconcile to GL" in the Routines section of the Financial module. Select "Payables Management" from the "Modules" drop-down menu and make sure the Accounts section populates with the AP trade GL account. Select the date range that you would like to reconcile and click "Process." Microsoft Dynamics will export a report to your spreadsheet program detailing the AP activity in both the purchasing and financial modules.
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Scroll to the bottom of the exported report. Look at the Total PM Ending Balance and the Total GL Ending Balance entries. The discrepancy in the balances should equal the difference between the total aged AP and the balance of the AP trade account.
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Review the details of the exported report to find the discrepancy. The left side of the report details individual AP transactions and the right side shows the total of each batch integrated from AP to GL. The transactions are divided into three sections: unmatched transactions, potentially matched transactions and matched transactions. Focus on the first two sections because the third section lists transactions appearing in both modules that are not causing the discrepancy. The Unmatched Transactions section usually details any difference between AP and GL. If the discrepancy isn't explained by those transactions, check each transaction listed in the Potentially Matched Transactions section to ensure that it is listed in both modules. Any transaction listed in one module and not the other is part of the difference.
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Tips & Warnings
On the exported report, make sure the total PM beginning balance and the total GL beginning balance match before beginning your reconciliation. This step will ensure that any existing problem occurred in the current month.
Print a trial balance for all GL accounts and make sure all accounts total zero. Information moves from the purchasing module into the financial module in a batch, so the problem is more likely to be in the AP trade GL account than in AP aging.
When printing the AP aging, select the check boxes to exclude fully paid documents, zero balance, no activity and unposted applied credit documents. Excluding these items will result in a shorter aging report with only necessary information.
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