This is useful to complete proper bank reconciliations and due to timing of payments clearing a bank.
Ex. : Company with YE Dec 31st, makes cheque payment on Dec 30th
There is a $10,000 bill, which gets paid via cheque on Dec 30th.
Cheque does not clear the bank until Jan 10th the following fiscal year.
Reconciliation at Dec 31st should show $10,000 as an outstanding cheque and AP should not have $10,000 as outstanding
Under the current system, this is possible. The issue arises when the cheque clears the bank.
On Jan 10th, the cheque clears and the bank feed brings in the withdrawal transaction.
This creates a duplicate transaction unless you delete the bank feed transaction manually. This requires the bookkeeper to identify that this cheque is a duplicate by manually chequing the vendor bills, the amounts, cheque # against what was written, etc... This takes a long time if you pay a lot of your bills with cheques.
The other solution I've received is to not make a cheque payment against the bill and wait until it clears the bank to match. This is not good accounting practice as AP at year-end will be misstated by $10,000 and cash over-reported by $10,000.