Overview of Tolerance Rules

Tolerance rules enables you to specify date and amount tolerances that prevent or warn you when reconciliation would be a breach of a defined tolerance.

• Amount tolerances are most often used when reconciling foreign currency transactions where there may be differences due to rounding or fluctuations in the conversion rate. They can also be used if a bank includes a processing fee in the bank statement line amount.

• Date tolerances are primarily used for checks that may be issued on one day and not clear the bank until days or weeks later.

Consider the following when defining your tolerance rules:

• Applying tolerances you can automate the reconciliation and accounting for these types of transactions.

• If no date or amount tolerance is defined within a rule, it requires an exact match.

• For manual reconciliation, a tolerance rule can optionally be assigned to a bank account.

• For automatic reconciliation, a tolerance rule can be associated with a matching rule in the Rule Set setup and can be applied if the matching rule matches on date and amount or both. However, when you assign a tolerance rule that includes amount tolerances to a matching rule that isn't a one to one match type, the amount tolerance is ignored.

Date Tolerance

Reconciliation date tolerances are defined as day ranges. The date tolerances are to validate that the source transaction date or dates are within a certain number of days before and after the bank statement line date or dates.

In manual reconciliation, if a date tolerance is specified in the tolerance rule assigned to the bank account it applies to all matching scenarios. In the event of a date tolerance breach, a warning message is displayed, but the user is allowed to reconcile the statement line or lines and the transaction or transactions. If no date tolerance is assigned or specified it's required to be an exact date match and a warning message is displayed.

In automatic reconciliation, a tolerance rule that includes date tolerances can be associated with a matching rule. If the matching rule matches on the date, then the date tolerance is applied. In this scenario a date tolerance breach prevents reconciliation.

Amount Tolerance

Reconciliation amount tolerances can only be used in one to one matching scenarios for both manual and automatic reconciliation. No reconciliation amount tolerances are allowed in one to many, many to one, or many to many matching scenarios. In these scenarios the amount of the bank statement line or lines must be equal to the amount of the transaction or transactions. Reconciliation amount tolerances can be defined as percentage or amount ranges or both. If both percentages and amounts are applied, the application uses the most conservative tolerance depending upon the statement line amount.

For example, if the amount tolerance equals plus or minus $5, the percentage tolerance equals plus or minus 1%, and the statement line amount is $100, the application first calculates the percentage amount (1% of $100 dollars = $1). It then compares this to the $5 amount and uses the smaller amount. In this case it's $1 dollar, so to reconcile a transaction to this line it must be between $99 and $101.

In automatic reconciliation, a tolerance rule that includes percentage, amount, or both types of tolerance ranges can be associated with a matching rule. But the tolerance can only be applied if the matching rule is a one to one match type rule. In this scenario of a one to one type match, any amount difference within tolerance is automatically created as an external transaction in cash management.