G/L accounts for house bank accounts

When you define a house bank account you need to have a G/L account ready. This will be used when posting related business transactions such as payments.

There are 2 approaches of G/L accounts for house bank accounts:

• G/L account with type “Balance Sheet Account”.
• G/L account with type “Cash Account” and subtype “B – Bank reconciliation account”.

With the balance sheet account type, there’s a 1:1 relationship between the bank account, or bank clearing account, and the G/L account.

For instance, if your company plans to use 2 bank clearing accounts (transfer and direct debit payment method) per each house bank account, there will be a need of creating 3 G/L accounts per house bank (2 for the clearing accounts and 1 for the bank account).

Therefore, there will be a large number of G/L accounts when a company works with many house bank accounts,

The cash account type is available since S/4HANA 2020. It provides a n:1 relationship, which means that there’s no need of creating different G/L accounts per each house bank account.

This approach implies fewer G/L bank accounts and clearing accounts, which also means less reconciliation effort between cash management and G/L account departments.

This approach is recommended for bank clearing accounts, defining one per payment method. You could also use it for bank accounts, but you still need one per bank account in order to have the same balance as the bank account.

For further details watch the following video: