What is the purpose of "bank reconciliation" in SAP FI?

The purpose of bank reconciliation in SAP FI is to match internal cash balances with bank records. This process is essential for maintaining the accuracy of financial statements and ensuring that the company's records align with those held by the bank. By reconciling bank statements, businesses can identify discrepancies due to outstanding checks, deposits in transit, bank fees, or errors in ledger entries. This alignment not only helps in accurate financial reporting but also in managing cash flow effectively and detecting fraudulent activities or errors early on.

Engaging in regular bank reconciliation helps organizations ensure that their financial data is both reliable and consistent, which is crucial for decision-making and maintaining the integrity of financial reporting. This function plays a vital role in financial accounting processes and overall financial health management in SAP FI systems.