Here is a tricky problem often faced by accountants and finance professionals: Let’s say you have 5 customers. Each of them need to pay you some money. Instead of paying the total amount in one go, they paid you in 30 small transactions. The total amount of these transactions matches how much they need to pay you. But you don’t know which customer paid which amounts. How would you reconcile the books?
If you match the transactions manually, it can take an eternity – after all there are more than 931 zillion combinations (5^30).
This is where solver can be handy. Solver can find optimal solution for problems like this before you finish your first cup of coffee.
Reconcile debits & credits using solver model – Tutorial
Step 1. Set up your solver model
In a blank sheet, list credits along a column and debits on the top in few columns, as shown below:
In the blank grid, Solver will fill 0 or 1 indicating whether credit in that row is matched with debit in that column or not.
This area is (C6:G35 in my workbook) is known as variable cell range in Solver model.
There are 2 rules to be followed when matching debits to credits:
- A credit can be matched with only one debit – ie sum of any row in C6:G35 range can be 1, at most.
- Total reconciled amount should be less than or equal to total credits – ie sum of any column in C6:G35 should be less than values in C5:G5 (debits).
To facilitate these rules, also known as constraints in solver parlance, let’s use column H & row 36.
- Write =SUM(C6:G6) in H6 and fill down the formula.
- Write =SUMPRODUCT($B$6:$B$35,C$6:C$35) in C36 and drag sideways to fill the formula in rest of the columns.
Our solver model should look like this:
Step 2: Set up optimization cell
To do its work, solver needs an optimization cell. Our goal is to maximize the amount of reconciled amount. So, in a blank cell write =SUM(C6:G36). This will be our optimization cell.
Step 3: Launch solver
Select the optimization cell (in my workbook, this is J6) and go to Data > Solver. (If you do not have solver, enable it using these instructions.)
Set up solver model as:
- Objective is to to maximize J6.
- Variable cells are C6:G35
- Constraints
- C6:G35 should be binary (o or 1)
- C36:G36 should be <= C5:G5
- H6:H35 should be <= 1
- Solver method is Simplex LP (our problem is linear)
When you are ready, Click Solve. Solver should take few minutes to find the solution.
Step 4: Examine the result
Once solver finds an answer, it will show Solver Results dialog. Click ok (you may also look at the sensitivity report). This loads the solver solution in to variable cell range.
Analyze the numbers and enjoy.
What if Solver solution is not optimum?
Occasionally, Solver fails to find optimum solution for linear problems with integer constraints. In such cases, try again by adjusting constraints & precision.
Download example workbook
Please click here to download the example workbook. Play with the solver model to learn more.
Other ways to reconcile data
If you deal with reconciliation problems, check out below examples to learn more:
- Match transactions using formulas
- Matching transactions using VBA macros
- Compare 2 lists using Excel conditional formatting
- Introduction to VLOOKUP formula – the easiest way to reconcile data
- Use SUMPRODUCT to consolidate revenues
How do you reconcile data?
Solver is a powerful way to reconcile data. It does take some time to set up the model and configure solver, but once your model is ready, Solver does all the heavy lifting.
What about you? What methods do you use to reconcile data? Please share your thoughts and tips in the comment section.
23 Responses to “Learn Top 10 Excel Features”
What it looks like if excel without formula?? 🙂
It would be not excel it would just be fancy tables in which you could just use power point. (Chandoo) would Access be an alternative?
Awesome piece of work!!!
Great article.
Chandoo - my biggest interest in the article was the awesome word-graphic at the top - where did you go to get it done into a shape?
@Rich.. thank you. I used http://www.tagxedo.com/ to generate this word cloud. I took all the comments in the original post, pasted them in tagxedo website and set up the shape etc.
Awesome Chandoo.. You need always needs coffee to start up with. BTW , how did u created the Heart Shaped picture filled with High Repetitive text in it .. Please put it on your Next blog ...
Chandoo, good article. I’ve added a link to it from Connexion – our collection of the most useful and interesting spreadsheet-related articles from the web. See http://www.i-nth.com/resources/connexion
Hi,
Just one small question. Where the hell have been I in the past for not discovering this website sooner?
I've lost a job interview recently where even though I had the subject knowledge, I was not upto their mark in Excel.
Thank you for all the free tips, guidance and for creating this forum environment.
[PS: I've just been through the site for the 1st time, and have signed up for the newsletter. You can expect pretty stupid questions from me soon]
Hy Chandoo, you always inspire me with to explore something new in excel. This data structure table is only for excel 2007 or compatible to 2010. I recently installed latest excel version 2013 in my System and experience problems regarding operating according to previous one. I'm waiting your article relates to that excel version.
Thanks
Awesome article Mr. Chandoo and that is a awesome heart shaped pic you created. Great tips as well.
[...] Learn Top 10 Excel Features | Chandoo.org – Learn Microsoft Excel Online. [...]
Chandoo is awesome..
Thanks, i got better, And i always get 90.50 in my grade card but now i get 96.50 i improved because of the tutorials you gave, Thank You Very Much Chandoo Guy.
Hi chandoo, i am intersted in seeing the video or step by step done procedure of analysing the comments and presenting in the data percentage steps. I think this one would be first step in finding out how generally happens data calculation. Thank you.
As well i would like to know how to get that black shape art of your face which i see in chandoo. I am interested in making it for me.
Nice to see the features considered by Excel users to be most useful. It might be a good idea to also analyze StackOverflow Excel questions to see what keywords appear most often.
Here are my top 10 Excel Features (for advanced users):
http://www.analystcave.com/excel-10-top-excel-features/
Thanks a ton for this it totally helped with my homework ????
Very good effort
Thank you for this. Lots of learning in the links you've provided for this septuagenarian.
Pls send me new post
Dude, your humor ? ?
Loved your work.
Hello Sir,
I am Sanjeev Khakre and i from Indore City, India , I am your big follower and i have watch your videos and learnt a lots of excel trick or function and many more . thanks so much for all of your excellent support.
Your excel knowledge is real awesome.
Thanks
Sanjeev
Your work is excellent but pls willing to know more details about the features of microsoft excel
Chandoo Would Access be a better alternative than VB?