How to reconcile your bank in FreeAgent

Your bank feed (or a statement upload) brings each transaction into FreeAgent. Reconciling means giving every one of those transactions an explanation: a sale paid, a supplier bill, a VAT payment, a transfer between accounts, and so on. FreeAgent's reports, VAT returns and year-end figures are built from those explanations, so an unexplained or wrongly explained transaction flows straight into your accounts.

1. Select Banking at the top of the screen, then Bank Accounts, and choose the account.
2. Open the Unexplained tab. These are transactions FreeAgent hasn't been told about yet.
3. Open a transaction and choose the Type (for example Payment, Invoice Receipt or Transfer) and the Category that describes the cost or income. Check the VAT shown is right for that item.
4. For money from a customer, choose Invoice Receipt, then select the exact invoice from the Invoice drop-down. Our invoice guide walks through this with a £120 example.
5. Save the explanation and move to the next one.
6. Open the For Approval tab. If Guess is switched on, FreeAgent has suggested an explanation for these transactions. FreeAgent recommends checking and approving each one rather than assuming it's right.

Duplicates usually happen when someone records the same money twice: once as a manual bank entry, and again when the bank feed imports it.

• If a payment hasn't appeared yet, wait for the feed rather than adding it by hand. Feeds can sometimes be delayed.
• If you did add a manual entry, FreeAgent's Guess looks for an imported transaction in the same account with the same amount and a date within a day. If it finds one, it merges them. It ignores locked manual transactions.
• If a duplicate manual entry can't be matched, it may need deleting. FreeAgent only recommends deleting bank transactions in limited cases like this, and deletion can't be undone.
• If the transaction is explained as an Invoice Receipt, be careful before deleting it. FreeAgent warns this can lead to reminder emails going to your customer if the invoice is no longer marked as paid.

Your statement shows £120 in from a customer, £45 out to a software supplier and a £500 transfer to your savings account. In FreeAgent you explain the £120 as an Invoice Receipt against that customer's invoice, the £45 as a Payment in the right cost category, and the £500 as a transfer to the savings account (which also needs to exist as a bank account in FreeAgent). Once all three are explained, the balance in FreeAgent should match your statement for that date.

1. Pick a date and compare FreeAgent's balance with your statement's balance on that same date.
2. Look in the Manually Added tab for entries that might duplicate imported ones.
3. Check for missing transactions, for example a gap while a bank feed was disconnected. A statement upload can fill that gap.
4. Check transactions dated before your FreeAgent start date. FreeAgent says these belong in your opening balance instead.
5. If the difference still won't go, stop before deleting anything and ask your accountant.

If personal spending goes through a business bank account, don't categorise it as a business cost. FreeAgent offers options such as Money Paid to User for money out and Money Received from User for money in. Which one is right depends on your business type and what the payment was, so check with your accountant if you're unsure.