Bank Accounts & Payment Batches

Monday morning. Meera arrives at the office to find Negi Bhaiya staring at a pile of vendor bills, rubbing his temples. "Five vendors to pay today," he mutters. "Rawat Transport, the packaging supplier, the printing press, the electricity board, and the cleaning service. All before Friday." Meera peeks at the bills. "Can't Bisht Ji just pay them one by one?" Negi Bhaiya shakes his head. "One by one means five trips to the bank portal, five authorisations, five entries. There is a better way — payment batches. But first, let me make sure the bank accounts are set up properly." He turns to Meera. "Today, you learn how banks and accounting work together."

Why Bank Accounts Matter in Accounting

Sharma Sir arrives with his morning chai and overhears the conversation.

"Good topic, Negi. Meera, let me tell you something. Twenty years ago, when I started my practice, most small businesses ran entirely on cash. A shopkeeper would take cash from the drawer, pay the supplier, and put the change back. Simple."

"But today? Everything has changed."

He counts on his fingers:

1. UPI — Even the chai stall outside accepts Google Pay
2. NEFT / RTGS — For larger payments between bank accounts
3. Cheques — Still used, though less common now
4. IMPS — Instant money transfer, any time, any day
5. Internet banking — Pay from your computer or phone

"Even Bisht Ji, who sells wholesale spices in Haldwani, does 90% of his payments through the bank now. GST invoices above Rs 50 are often paid via bank. Most vendors prefer bank transfer."

Why does this matter for accounting? Because every bank transaction creates a trail. The bank has a record. Your books have a record. These two records must match. If they don't match, something is wrong — and finding that "something" is called bank reconciliation.

"Also," Sharma Sir adds, "the Income Tax department prefers bank transactions. Cash payments above Rs 10,000 in a single transaction are not allowed as a deduction under the Income Tax Act (Section 40A(3)). So doing business through the bank is not just convenient — it is legally better."

Setting Up Bank Accounts in ERPLite

"Let's start with the basics," Negi Bhaiya says. "Bisht Traders has two bank accounts. Let's set them up."

Step 1: Add a Bank Account

1. Go to Masters > Bank Accounts > + New
2. Fill in the details for the primary account:

3. Click Save

Now add the second account:

4. Click Save

"Why two bank accounts?" Meera asks.

"Many businesses keep multiple accounts," Negi Bhaiya explains. "One for day-to-day operations, one for savings or for specific purposes. Some businesses have one account just for salary payments, another for vendor payments. It helps keep things organized."

Understanding IFSC Code

"Meera, do you know what IFSC is?"

IFSC = Indian Financial System Code. It is an 11-character code that identifies a specific bank branch. You need it for NEFT, RTGS, and IMPS transfers. The first 4 characters are the bank code, the 5th is always 0, and the last 6 identify the branch.

"For example, SBIN0001234 — SBIN is State Bank of India, 0 is fixed, and 001234 is the branch code."

"You can find any bank's IFSC on the RBI website or on your cheque book."

Recording Bank Transactions

"Every time money moves through the bank, we must record it in ERPLite. Let me show you the common types."

Type 1: Bank Payment (Paying a Vendor)

Bisht Ji pays Rs 25,000 to a packaging supplier via NEFT.

1. Go to Transactions > Payment > + New
2. Fill in:

3. Click Save and Approve

The journal entry:

Type 2: Bank Receipt (Receiving from a Customer)

A customer, Gupta Kirana, pays Rs 50,000 via RTGS against their outstanding bills.

1. Go to Transactions > Receipt > + New
2. Fill in:

3. Click Save and Approve

Type 3: Inter-Bank Transfer

Bisht Ji transfers Rs 50,000 from SBI to PNB.

1. Go to Transactions > Contra > + New
2. Transfer From: SBI Account
3. Transfer To: PNB Account
4. Amount: Rs 50,000
5. Click Save

The journal entry:

"This is just like the contra voucher Meera learned about in Chapter 5," Negi Bhaiya points out. "Money moves from one pocket to another. Total stays the same."

Payment Batches — Paying Multiple Vendors at Once

"Now for the fun part," Negi Bhaiya says. "We have five vendors to pay. Instead of creating five separate payments, we can create a payment batch."

Payment Batch = A group of payments bundled together, reviewed and approved as one set, and then processed in a single go. This saves time, reduces errors, and makes it easy to track.

Why Use Payment Batches?

"For a business like Bisht Traders with 30-40 vendors, payment batches are essential. On payment day, you create one batch, review it, and process it."

Step 2: Create a Payment Batch

1. Go to Transactions > Payment Batch > + New Batch
2. Fill in the batch header:

3. Add the vendors and amounts:

4. Click Save

Step 3: Review and Approve

"Before the batch is processed, it must be reviewed," Negi Bhaiya says.

"This is important for businesses with multiple people handling accounts. The person who creates the batch is not always the person who approves it. This separation is called maker-checker — it reduces the risk of mistakes and fraud."

1. Sharma Sir (or Bisht Ji) opens the batch
2. Reviews each payment:
   • Is the amount correct?
   • Is it for a valid invoice?
   • Is the bank account correct?
   • Has TDS been deducted where needed? (Rawat Transport's payment is already after TDS deduction — Rs 73,500 instead of Rs 75,000)
3. Clicks Approve Batch

The batch status changes from "Draft" to "Approved."

Step 4: Export for Bank Upload

"Many banks allow you to upload a file instead of typing each payment manually on the internet banking portal," Negi Bhaiya explains.

1. Click Export Batch
2. Select format: SBI Bulk Payment Format (each bank has its own format)
3. ERPLite generates a file (usually CSV or Excel) with all payment details
4. Download the file

The file looks something like this:

5. Bisht Ji logs into SBI internet banking
6. Uploads the file in the "Bulk Payment" section
7. Authorises the payments
8. The bank processes all four NEFT payments at once

(The electricity bill is paid separately through the utility portal or bank bill-pay service.)

"This saves so much time," Meera says.

"Especially during GST season," Negi Bhaiya agrees. "Some clients have 50-60 vendor payments in a month. Imagine doing each one manually!"

Step 5: Mark Batch as Paid

After the bank confirms the payments:

1. Go back to the payment batch in ERPLite
2. Enter the UTR numbers (Unique Transaction References) from the bank:

3. Click Mark as Paid
4. The batch status changes to "Paid"

ERPLite automatically creates journal entries for each payment.

Bank Reconciliation — Making Your Books Match the Bank

"Now comes a topic that every accountant must know," Sharma Sir says. "Bank reconciliation."

"Meera, let me ask you. If ERPLite says the SBI balance is Rs 2,20,000, and the bank statement says the balance is Rs 2,35,000 — which is correct?"

Meera hesitates. "The bank statement?"

"Not necessarily. The answer is — neither might be wrong. They could both be correct, just at different points in time, or reflecting different information."

Bank Reconciliation = The process of comparing your books (ERPLite) with the bank statement to identify differences and ensure they match.

Why Do Differences Happen?

"There are several legitimate reasons why your book balance and bank balance might differ."

"Think of it like this," Sharma Sir says. "You and the bank are both writing in separate notebooks about the same account. Sometimes you write something before the bank sees it. Sometimes the bank writes something before you see it. Reconciliation is when you sit down and compare the two notebooks."

Doing a Bank Reconciliation in ERPLite

Meera's Task: Reconcile Bisht Traders' SBI Account for October 2025

"Let's do this step by step," Negi Bhaiya says.

Step 1: Get the Bank Statement

Bisht Ji has downloaded his October 2025 bank statement from SBI online banking. It shows:

Step 2: Compare with ERPLite

Meera opens the bank ledger in ERPLite and compares line by line.

1. Go to Banking > Bank Reconciliation
2. Select Bank: SBI — 30456789012
3. Select Period: October 2025
4. Upload or enter the bank statement

ERPLite shows a side-by-side comparison:

Step 3: Identify and Fix Differences

Meera finds three unmatched items:

1. Pandey Stores — Rs 35,000 (Credit, 28-Oct)

"This is a UPI payment from a customer. It came directly into the bank. We did not record it in ERPLite."

Fix: Create a Receipt entry in ERPLite:

• Received from: Pandey Stores
• Amount: Rs 35,000
• Mode: UPI
• Date: 28-Oct-2025

2. Bank Charges — Rs 500 (Debit, 30-Oct)

"The bank charged Rs 500 for transaction fees. We did not know about this until the statement came."

Fix: Create a Payment entry in ERPLite:

• Paid to: SBI (Bank Charges)
• Amount: Rs 500
• Account: Bank Charges (Expense)
• Date: 30-Oct-2025

3. Interest on OD — Rs 1,200 (Debit, 31-Oct)

"Bisht Ji has an overdraft facility. The bank charged Rs 1,200 interest."

Fix: Create a Payment entry in ERPLite:

• Paid to: SBI (Interest on OD)
• Amount: Rs 1,200
• Account: Interest Expense
• Date: 31-Oct-2025

Step 4: After Fixing — Check Balance

After recording these three entries, Meera checks:

"They match!" Meera says, relieved.

"That is the goal," Sharma Sir says. "After reconciliation, your book balance and bank balance should be exactly the same."

Step 5: Mark as Reconciled

1. In ERPLite, mark all matched entries as "Reconciled"
2. Click Complete Reconciliation
3. ERPLite saves the reconciliation for the record

"You should do bank reconciliation at least once a month," Sharma Sir says. "Some busy businesses do it weekly. The more often you do it, the easier it is — because there are fewer items to check."

Uncleared Cheques — A Special Case

"Meera, there is one situation we did not encounter today but you must know about," Sharma Sir says.

"Sometimes you issue a cheque, and the vendor takes a few days to deposit it. You have already recorded the payment in your books. But the bank has not deducted it yet."

Example: On 29th October, Bisht Ji writes a cheque for Rs 8,000 to a supplier. Meera records it in ERPLite on 29th October. But the supplier does not deposit the cheque until 3rd November.

• ERPLite balance on 31st October: Rs 1,82,800 (lower — because the payment was recorded)
• Bank balance on 31st October: Rs 1,90,800 (higher — cheque not yet cleared)
• Difference: Rs 8,000 (the uncleared cheque)

"In this case, during reconciliation, you note the cheque as 'issued but not yet cleared.' It is not an error. It will resolve itself when the cheque is deposited."

"ERPLite has a column for this — 'Cheque Clearing Date.' You leave it blank until the cheque appears on the bank statement."

Payment Modes — A Quick Reference

Meera makes a neat reference table:

"Which mode is best?" Meera asks.

"It depends on the amount and urgency," Negi Bhaiya says. "For most vendor payments, NEFT is fine. For big payments like the truck, RTGS is better because it's instant and suitable for large amounts. UPI is great for small, quick payments."

Tips for Managing Bank Accounts

Sharma Sir shares his years of experience:

Tip 1: Never Mix Personal and Business

"Bisht Ji must never use his personal bank account for business transactions. Keep them completely separate. Otherwise, the tax department may question personal deposits as business income."

Tip 2: Record Every Transaction the Same Day

"Don't let bank entries pile up. If a payment is made today, record it today. The longer you wait, the more you forget, and reconciliation becomes a nightmare."

Tip 3: Keep UTR/Reference Numbers

"Every digital payment has a reference number — UTR for NEFT/RTGS, UPI reference ID, cheque number. Always record these in ERPLite. If there is ever a dispute, this is your proof."

Tip 4: Reconcile Monthly Without Fail

"I have seen businesses that did not reconcile for a year. When they finally sat down, there were hundreds of mismatches. Some were genuine errors, some were fraud that went unnoticed. Monthly reconciliation catches problems early."

Tip 5: Watch for Unusual Charges

"Banks sometimes charge fees you did not expect — SMS charges, debit card fees, minimum balance penalties. During reconciliation, review every bank charge. If something looks wrong, call the bank."

Quick Recap — Chapter 26

Bank accounts in ERPLite: Set up with bank name, account number, IFSC, and opening balance.

Payment Batch: Bundle multiple vendor payments into one batch. Review, approve, export to bank, and process in one go. Saves time, reduces errors.

Bank Export: ERPLite can generate files in your bank's bulk payment format for direct upload.

Bank Reconciliation: Comparing your books with the bank statement. Differences arise from: uncleared cheques, bank charges, interest, direct deposits.

Goal: After reconciliation, book balance = bank balance.

Payment Modes: NEFT (regular), RTGS (large amounts), IMPS (urgent), UPI (small/quick), Cheque (when needed).

Golden Rule: Reconcile every month. Record every transaction the same day. Keep personal and business accounts separate.

Practice Exercise — Try This Yourself

Exercise 1: Bisht Traders' ERPLite shows an SBI balance of Rs 1,45,000 on 30th November. The bank statement shows Rs 1,62,000. Identify the possible reasons for the difference from the clues below:

a) A cheque for Rs 12,000 was issued to a supplier on 28th November but not yet deposited. b) A customer paid Rs 8,000 via UPI on 29th November, but Meera has not yet recorded it in ERPLite. c) The bank charged Rs 1,000 for annual maintenance, not yet recorded in ERPLite.

Calculate the reconciled balance.

Exercise 2: Create a payment batch for the following vendors:

What is the total batch amount? If TDS of 2% applies on Garhwal Logistics (transporter, firm), what is the actual payment to them?

Exercise 3: Match each situation with the correct reconciliation action:

Answers:

Exercise 1:

• Book balance: Rs 1,45,000
• Add: UPI from customer not recorded: +8,000
• Less: Bank charges not recorded: -1,000
• Adjusted Book Balance: Rs 1,52,000
• Bank balance: Rs 1,62,000
• Less: Cheque not yet cleared: -12,000 (bank hasn't deducted it yet, but we have)
• Wait — let's recalculate. The bank balance is higher because the cheque hasn't been deducted. So: Bank balance Rs 1,62,000 minus uncleared cheque Rs 12,000 = Rs 1,50,000. But adjusted book balance is Rs 1,52,000. Hmm — that leaves Rs 2,000 unaccounted. Check if there are other items!
• Actually, let us reconcile properly: Book balance Rs 1,45,000 + Rs 8,000 (UPI) - Rs 1,000 (bank charges) = Rs 1,52,000. Bank balance Rs 1,62,000 - Rs 12,000 (cheque not cleared) + Rs 8,000 (UPI already in bank) - Rs 8,000 (already counted) = wait, the UPI is already in the bank statement but NOT in the book. And the bank charge is already in the bank statement but NOT in the book. And the cheque is in the book but NOT in the bank statement. So: Adjusted Book = 1,45,000 + 8,000 - 1,000 = 1,52,000. Adjusted Bank = 1,62,000 - 12,000 = 1,50,000. Difference of Rs 2,000 remains — there must be another item to investigate!

Exercise 2: Total batch = 15,000 + 8,500 + 22,000 = Rs 45,500. TDS on Garhwal Logistics: 2% of 22,000 = Rs 440. Actual payment to Garhwal Logistics: 22,000 - 440 = Rs 21,560. Total actual batch payout: 15,000 + 8,500 + 21,560 = Rs 45,060.

Exercise 3: Bank interest = (c), Customer NEFT = (a), SMS charges = (b), Uncleared cheque = (d).

Fun Fact

India's UPI system is one of the greatest fintech innovations in the world. In 2024, UPI processed over 13,000 crore transactions — that is more than all credit card transactions in Europe and America combined! Countries like Singapore, UAE, France, and Sri Lanka have started adopting UPI for payments.

And here is something amazing: UPI was built by the National Payments Corporation of India (NPCI), and it launched in 2016. Just 8 years later, even a spice wholesaler in Haldwani uses it to pay his transporter in Almora. Even the vegetable vendors near the bus stand accept it. Technology that was once only for big banks is now in everyone's pocket.

When Meera reconciles Bisht Ji's bank account, she is participating in this digital revolution — making sure every digital rupee is accounted for, just like Sharma Sir used to account for every paper rupee decades ago. The tools change. The principles don't.

Meera has now learned TDS, payroll, depreciation, and bank management — the "beyond basics" of accounting. In the next part of the book, she will look at what all this knowledge means for her career. Where can it take her? Let's find out.