Need guidance on Bank reconciliation

[nithin_pranesh]

Dear Experts,

I am trying to understand the steps involved in bank reconciliation in SAP. I have already looked at the SAP Help Portal, but the documentation is quite overwhelming for me to read in detail.

Can anyone please break down the entire bank reconciliation process into simple blocks or steps?
A straightforward list or basic flow will be really helpful.
If you can also mention common tips or mistakes to avoid, that would be great.

Thank you in advance!

Best,

Nithin

[MOHAMMED_BASER]

In SAP, the external transaction type in an MT940 file maps to posting rules, and for one-step processing, selecting "Clear in sequence" is typically required to ensure proper clearing and posting.

MT940 Format: This is a standardized format used by banks to send electronic bank statements. It contains transaction details in tags like :61: and :86:.

External Transaction Type: SAP reads codes (e.g., NTRF, NCHG, NCHK) from the MT940 file—usually from tag :86: or :61:—and maps them to external transaction types.

These external transaction types are then linked to posting rules in SAP configuration.

Posting Rules determine how each transaction is posted in SAP (e.g., which G/L accounts are debited or credited).
You configure this mapping in OT83 under Assign External Transaction Type to Posting Rule. This is crucial for automatic reconciliation.

[nithin_pranesh]

Hi Baser, Please provide an example, I'm confused. how SAP will identify the External transaction type like (NTRF) from the tag in MT940 file. Best, Nithin

[MOHAMMED_BASER]

Hi Nithin,
Yes, you are correct. Please find the steps for Bank Reconciliation in SAP S/4HANA Public Cloud (Simplified Flow).

1. Set Up House Bank and Bank Accounts
Use the Manage Bank Accounts Fiori app.
Define House Bank & Bank Account (linked to a G/L account of type Cash Account with subtype B – Bank Reconciliation Account)

2. Create G/L Accounts
Create main bank reconciliation account (Subtype B) and Bank Subaccounts (Subtype S) for incoming/outgoing payments.
These are defined using the Manage G/L Account Master Data app.

3. Configure Bank Statement Processing
Use the Manage Automatic Bank Statement Rules app.
Define external transaction codes (e.g., NTRF, NCHK) and Posting rules that map to G/L accounts
(It is the replacement of OT83/OT52 from on-premises.)

4. Import Bank Statements
Use Import Bank Statements app to upload MT940 or CAMT.053 files. You can alternatively, set up Bank Communication Management for automatic uploads.

5. Monitor and Process Statements
Use Reprocess Bank Statement Items or Postprocess Bank Statement Items apps.
System auto-clears matched items.
Unmatched items can be manually assigned or posted.

6. Clear Open Items
Use Clear Bank Subaccounts or Manage Journal Entries to manually clear if needed.
Ensure all subaccounts are reconciled with the main bank account.

7. Review Reconciliation Reports
Use Cash Flow Analyzer or Bank Statement Monitor for visibility.
Confirm balances match between SAP and actual bank.

I hope it will help you

[nithin_pranesh]

Hi Baser, Thank you for the solution. I have a few queries for clarification: When uploading an MT940 bank statement, what is the connection between the transactions in the MT940 file and the external transaction type? Regarding processing types — in one-step and two-step processing — if we use the one-step processing method, it clears the open item from the bank sub-account and posts it to the bank account. While creating the processing rule, I believe I need to select "Clear in sequence". Is that correct? Thank you for your continued support. Best regards, Nithin

[MOHAMMED_BASER]

We are normally connecting with bank with api endpoint provided by bank. i can give you how it works

[Chris1973]

Hi @nithin_pranesh 

Thank you for the question.

The question is somewhat generic. Depending on the issue you are trying to resolve, specific answers can be provided.

Considering the topic is quite broad, I suggest you get a clear overview of your needs by reading through the documentations. Otherwise you can provide a specific issue you are trying to resolve and we will be happy to help.

Below is a summary of steps you may consider:

1. Upload the Bank Statement either electronically or manually
2. Automatic Matching of transaction with SAP open items
3. Manual Reprocessing of unmatched entries
4. Post the Bank Statement to update GL
5. Verify reconciliation
6. Resolve any differences that comes up if any.

The following references provide further details.

Reconciliation

Reprocess Bank Statement Items

Bank Account Balance Reconciliation

SAP KBA 3374309

Regarding common tips,

• It is important that you use electronic bank statement if you are carrying out any automation.
• Make sure you maintain clear posting rules and reconcile regularly to avoid mismatches.
• Avoid waiting till month end becuase small mismatches may accumulate.

Let me know if you have further questions.

Best regards

Chris

[nithin_pranesh]

Hello @Chris, What is the underlying logic that links the keys in the MT940 bank statement (such as transaction codes or keys) to the external transaction types in SAP? As far as I can see, we haven’t explicitly defined a direct mapping between them in our configuration. How does SAP determine or identify the correct external transaction type from the MT940 file during bank statement processing? If there is no direct configuration, what is the standard logic or mechanism behind this determination? Best, Nithin

[MOHAMMED_BASER]

Hi Nithin,
As requested, please find below the simplified steps for Bank Reconciliation in SAP
1. Set Up Bank Master Data
Create house banks using transaction code FI12.
Define bank accounts (main, incoming, outgoing) and link them to GL accounts.

2. Configure Electronic Bank Statement (EBS)
Set global parameters for EBS.
Create account symbols (e.g., for bank charges, check issued, check received).
Define posting rules for each account symbol.
Assign transaction types to posting rules.
Link external transaction types to posting rules.

3. Upload Bank Statement
Manual: Enter statement details manually.
Electronic: Upload MT940 or other formats via transaction FF_5 or FEBAN.

4. Automatic Matching
SAP matches bank statement items with open items in the system.
Uses predefined rules and transaction types.

5. Post and Clear Transactions
System posts entries and clears matched items.
Unmatched items are flagged for manual review.

6. Manual Reconciliation (if needed)
Use FEBA or FEBAN to manually match and clear items.
Adjust entries or post corrections if necessary.

7. Review and Finalize
Check reconciliation reports.
Ensure all discrepancies are resolved.
Post final entries to reflect accurate balances.

Hope the above steps help you.

[nithin_pranesh]

Hello Baser, Thanks for the answer. In the public cloud it's seems to be different. If you could generate the same for public cloud, it would be great! Best, Nithin