Lesson 3 — Clearing mode, and the double count the wrong habit causes
This is the one configuration choice that can corrupt a bank balance, and it takes thirty seconds to get right.
The practice this answers. The bank statement is the only record of what your bank actually did. Every accounting method eventually has to agree with it, and the question this setting asks is simply which side drives the agreement — you, or the statement.
The two modes. Choose how a cheque becomes Cleared.
| Clearing mode | What happens | When it suits you |
|---|---|---|
| Manual clearing entry | The module posts the clearing entry directly, Dr Bank and Cr Cheques Under Collection | You drive clearing yourself, typically when you reconcile outside the system |
| On bank statement reconciliation | The cheque is marked cleared the moment its interim line reconciles against the statement line, and nothing is booked | You reconcile inside the system and want the statement to be the single source of bank lines |
Read the second row again, because it is the subtle one. Reconciliation mode books nothing of its own. The cheque changes state, the statement line supplies the bank movement, and the interim line is matched against it. That is precisely why nothing can be duplicated in that mode: there is only ever one bank line, and it came from the bank.
Now the rule that protects the first row. In manual mode the module has already posted the bank side of the movement, so if you also encode the same cheque movement from an imported bank statement, the bank line is counted twice. It is not a system fault and it produces no warning, because from the outside those look like two legitimate transactions. Pick manual clearing, and the imported statement line for that cheque must be matched against the entry the module already posted rather than encoded afresh.
The click path. On the same settings page, open the Clearing & Alerts block and read the clearing-mode field. If On bank statement reconciliation is disabled, that is expected: the mode needs a bank-reconciliation interface to reconcile against, and the setting stays unavailable while none is installed. In that situation keep Manual clearing entry, which works without any additional interface, and apply the rule above without exception.
The worked example. Suppose cheque 004512 had cleared in full on its due date. On manual clearing the module posts one entry — Dr Bank AED 120,000.00 and Cr Cheques Under Collection AED 120,000.00 — and the interim account returns to zero. On reconciliation mode the same result arrives from the other direction: you match the interim line to the bank statement line, the cheque flips to Cleared, and no second entry exists anywhere. Same ledger, two routes, and only one of them needs discipline from you.
The failure mode. A cheque that never clears by itself is almost always a clearing-mode question rather than a defect. In reconciliation mode a cheque clears only when its interim line is reconciled against the bank statement line, so reconcile the statement and the state follows. In manual mode nothing is automatic by design — you clear it, and the entry is posted for you.