At Puzzle, we're all about making accounting easier for founders and bookkeepers. One of the latest tools we've introduced to help with that is the concept of a Set Balance.
So, What Exactly Is Set Balance?
Imagine you're running your startup, and you have multiple treasury or investment accounts to manage. Keeping track of every transaction and ensuring that your ledger matches the actual account balances can be a real challenge. That's where Set Balance comes into play.
Set Balance is a feature in Puzzle that automatically adjusts your treasury accounts to match their actual balances. It compares the balance received via API from your financial institutions with the sum of all Puzzle ledger entries for each account. If there's a difference, Puzzle posts a journal entry to adjust the balance, ensuring your ledger stays accurate and up-to-date.
These placeholder entries are posted to:
Investment / Treasury Account Balance accounts
Unrealized Gain / Loss accounts
The intention is that these are temporary placeholders. You still want to add the actual transaction details before you reconcile. When you enter the transaction details, either manually or via CSV, the temporary “Set Balance” transactions will automatically be removed.
Why We Built Set Balance at Puzzle
We noticed a couple of things:
Founders Need Simplicity: Managing finances is complex enough. Founders appreciate tools that simplify processes, allowing them to focus on growing their business rather than getting bogged down in accounting details.
Manual Reconciliation is Time-Consuming: Manually reconciling treasury accounts eats up valuable time that could be better spent on strategic tasks.
Flexibility is Key for Bookkeepers: While automation is great, professional bookkeepers often want control over financial adjustments. They need the flexibility to enable or disable features based on the specific needs of the business.
Set Balance addresses these points by automating the reconciliation process, making life easier for founders. At the same time, it offers bookkeepers the flexibility to turn off the feature if they prefer to handle adjustments manually.
Why Should You Care About Set Balance?
For Founders:
Ease of Use: Simplifies financial management, so you can focus on running your startup.
Time-Saving: Automates tedious tasks, freeing up your schedule for what matters most.
Peace of Mind: Ensures your financial data is accurate without constant oversight.
For Bookkeepers:
Flexibility: Offers the option to enable or disable automatic adjustments based on your professional judgment.
Control: Allows for manual reconciliation when precision and customization are required.
Efficiency: Even when disabled, Puzzle provides tools to make manual reconciliation more streamlined.
Options for Ongoing Maintenance of Treasury / Investment Accounts
Puzzle allows users with 2 options to manage their treasury and investment accounts effectively:
Option 1: Keep Set Balance Adjustments On
Benefits: The account balance stays up to date during the month and reflects the correct balance on your balance sheet
Considerations: This allows for real-time accuracy but may cause missing transactions to go unnoticed, as they won’t show up as a balance discrepancy in your reconciliations.
Option 2: Turn Set Balance Adjustments Off
Benefits: Keeps things simple and gives bookkeepers (and founders) full control over the reconciliation process
Considerations: The account balance will be incorrect between reconciliations, as no placeholder entries are made.
How Does Set Balance Work?
Set Balance operates based on a simple but powerful principle:
When Enabled: For the effective date range you specify, Puzzle will automatically post journal entries to adjust the balance of each investment account. It calculates the difference between the API-received balance and the sum of all ledger entries, then makes the necessary adjustments.
When Disabled: Puzzle won't post any balance adjustment entries for the specified date range, giving bookkeepers full control over the reconciliation process.
Removing Set Balance Entries
If you prefer handling adjustments manually or need to clean up existing entries:
Delete Individual Set Balance Events: Within reconciliations, you can delete individual set balance entries. (Note: This will not prevent future set balance entries)
Delete All Subsequent Set Balance Events: You can delete all subsequent set balance events until the end of the reconciliation period. This is recommended since deleting one may cause a new one to be created for the next day.
Turn Off Creation of New Entries: You can turn off the creation of new set balance entries in settings under “Auto Balance Adjustments.”
Auto Adjustment Settings
Activating or deactivating Set Balance is straightforward:
Navigate to Settings: Log in to your Puzzle account and head over to the settings page.
Find Auto-Balance Adjustments: Look for the option labeled "Auto-balance adjustments."
Enable or Disable the Feature: Toggle it on or off based on your preference and set your desired effective date range.
Done: It’s just that easy.
The Bottom Line
Set Balance is all about giving you more control, accuracy, and ease when managing your financial data. By automating the reconciliation of your treasury accounts, it helps keep your ledger clean and reliable.