In the Payment Reconciliation Tool, on the left side, you have invoices and on the right side, you have payments, journal entries & credit notes.
Now, if the invoice date is 10th February & the payment date is 5th March & if I attempt to reconcile this on 20th April, then the reconciliation is effective as of 20th April.
The logic of this tool is to make sure that the statement of accounts is aligned and it shows the true / fair view. With the above situation, though the payment has come on 5th March and technically, the reconciliation can be effective from this date.
However, with the option of not having a date field for “effective date of reconciliation”, the whole tool becomes is effective.
If I take the Statement of accounts as of 31st March, I will find that this invoice & payment is not reconciled - but as of 20th April, it will be deemed to be reconciled.
This is not correct. There is a slight nuance to how reconciliation happens on different scenarios.
Scenario 1 - Payment/Journal Entry against Sales Invoice:
In this case, reconciliation happens on the date of the Payment/Journal Entry. In your example, it is 5th March. This is because, reconciliation process updates the References child table in case of payment entry or in the ‘accounts’ child table in case of Journal, and posts ledger entries. The Ledger entries will have the same posting date as the payment/journal entry.
Scenario 2 - Sales Return against Sales Invoice:
When a Sales Return(Credit Note) is reconciled against an Invoice, reconciliation takes effect on the date of reconciliation. In your example, it is 20th Apr. In this scenario, reconciliation tool creates a new Journal Entry of type ‘Credit Note’ to reconcile, and this journal will have the same date as when you reconcile.
Payment Type
Reconciliation Effect
Payment Entry/ Journal Entry
on the posting date of Payment/Journal
Sales/Purchase Return
on the date of reconciliation
This is not possible.
Payment Entry and Journal Entry has ‘posting_date’ field, which is the date that will be posted to ledger. If we allow different posting_date at the ledger for each reconciliation, this fundamentally goes against the basic expectation that whatever posting_date is mentioned in the document, will reflect in ledger.