Reconcile automatic transfers between a bank account and a credit line

Retrieve the bank agreement, credit-facility terms and account mapping. Identify the deposit account, loan account, target balance, sweep timing and authorized exceptions. Cathay Bank describes loan sweeps as predetermined automatic transfers between deposit and credit accounts. Use your own agreement to establish the actual mechanics and limitations.

This reconciliation concerns an arrangement the business already uses. Decisions to add borrowing, change limits or alter sweep settings belong with the authorized finance owner and relevant advisers. The bookkeeper needs a reliable record of the approved setup, including when it changed during the period.

Obtain detailed bank and loan activity for overlapping periods. For each sweep, match the amount, currency, date and reference on the deposit account with the loan movement. Preserve timing differences when the statements use different posting dates or cutoffs. An unmatched side requires investigation rather than a balancing journal.

Classify transfers according to their supported purpose. An advance increases borrowed funds; a principal repayment reduces the relevant debt balance under the accountant's policy. Neither should automatically enter sales or ordinary operating expenses merely because it appears as money in or out on the bank feed.

Check whether both bank and loan integrations generate entries. The correct link may be a transfer or another supported workflow, depending on the software. Importing two independent journals for the same sweep can duplicate cash or debt movements even when each statement is individually complete. Retain the cross-reference between both imported records and confirm that the resulting ledger contains one supported transfer.

Start with the verified opening loan principal, add advances and subtract supported principal repayments. Identify adjustments separately and agree the closing result to the lender's statement. Keep interest, fees and other charges in distinct lines so their treatment can be reviewed.

A stable operating-account balance can coexist with significant borrowing and repayment. Review gross loan movements as well as the closing debt balance. Netting the month's advances and repayments may conceal the volume of activity or make a missing transaction harder to find.

For a hypothetical month with $70,000 of advances and $65,000 of principal repayments, debt increases by $5,000 before other supported adjustments. The records should retain both gross amounts. The accountant can then determine the appropriate reporting presentation without reconstructing activity from the net change alone.

If a sweep does not occur as expected, compare the bank result with the agreement, available facility information and any bank notice. Ask the bank to explain the specific event. Do not assume a sweep will always fund a payment or that a displayed credit limit equals immediately accessible borrowing capacity.

Give management the actual bank balance, outstanding debt and confirmed facility information as separate measures. Show pending sweeps and unresolved differences with their dates. This helps the finance owner understand the cash position without treating borrowed liquidity as internally generated cash.

Retain the paired statements, sweep matching schedule, loan roll-forward and approved adjustments in the close pack. Review recurring mismatches with the bank or integration owner. When the arrangement ends or changes accounts, record the final sweep and supported closing balances so an automated movement is not left running outside the reconciled account structure.