A Deposit in Transit Is a Timing Difference, Not a Problem to Fix
Deposits dated on the last business day of the month often clear the bank in the following period. When that happens, the deposit appears as a deposit in transit on the reconciliation. In MIP®, this is expected behavior and does not require correction.
Backdating the deposit to force it to clear in the current period distorts the record. The cash was deposited when it was deposited, and the bank processed it when it processed it. Those two events do not always align within the same month, and the reconciliation exists to show that difference.
Leaving the deposit in transit allows it to resolve naturally in the next reconciliation. The item drops out when the bank clears it, and the timeline remains intact. This approach keeps reconciliations honest and avoids adjustments that exist only to make one month look cleaner than it really is.
This video is for accounting teams that want reconciliations to reflect real timing rather than manufactured alignment. It is not intended for organizations that backdate transactions to eliminate normal timing differences.
McGovern Consulting Group provides MIP Accounting® Training and Implementation Services. We focus on timing discipline because reconciliations work only when differences are allowed to be what they are.
If you want reconciliations that stand up without explanation gymnastics, schedule time with us to review your process.
https://mcgoverncg.com/schedule/
If you want to strengthen your MIP fundamentals first, free MIP® fund accounting training is available here.
https://www.freemipfundaccountingtraining.com/
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