Automate the Reconciliation Process: Ultimate Guide for Finance

Without automation, it takes companies an average of 10 days to complete reconciliation processes. That time could be better spent on high-value and strategic tasks, rather than repetitive, manual and data-heavy checklists. This is why companies are investing in tools that help automate reconciliation process.

In this article, we will share how automated reconciliation can benefit your business, as well as what it entails.

Coming Up

What is Reconciliation?

What is Automated Reconciliation?

What is the Difference Between Reconciliation and Matching?

How Does Reconciliation Work?

What are the Challenges of Reconciliation?

What are the Benefits to Automate Reconciliation Process?

What are the Best Tools to Automate Reconciliation Process?

Final Thoughts

What is Reconciliation?

Reconciliation is the accounting process of comparing records of transactions both internally and externally to ensure that they match. It’s a crucial process that takes place consistently, be it daily, weekly, monthly, quarterly or annually.

By conducting reconciliation, companies are able to ensure that their records are in order and help to spot fraud or inconsistencies early on. If records are not matching, then they must perform an investigation to uncover the reason for the misalignment and make adjustments as necessary.

What is Automated Reconciliation?

The manual and meticulous process of reconciliation can be a drag on any accounting and finance team. As much as it is necessary, it also can feel draining and overwhelming due to the attention to detail required and amount of data collection necessary.

With automated reconciliation using software, finance teams are able to free their time, expedite the process, and maximize accuracy. A solution like SolveXia automates reconciliation process by collecting all data in a centralized repository, performs transaction matching, and notifies users of any exceptions within the records.

As a result, teams are able to improve productivity 85x over and perform reconciliations with utmost confidence.

What is the Difference Between Reconciliation and Matching?

Matching is an aspect within reconciliation. It is the act that takes place to perform reconciliation properly. For example, within a bank reconciliation, internal data such as ledgers are compared with external documentation - in this case, a bank statement.

Accounting professionals, or a tool like SolveXia (with automated reconciliation process) moves line-by-line to make sure that the records match. They should match in their amount, date, and all information displayed.

When there are items that do not match, teams have to figure out the reason why. While it could be an explainable reason, such as a timing delay, it may not always be excusable. In some cases, records that don’t match are indicative of fraud or mistakes. If this is the case, it should be rectified right away to mitigate negative outcomes.

How Does Reconciliation Work?

Whether you’re performing automated reconciliation in Excel, automated reconciliation with SolveXia, or the entire process manually, it will flow through the same steps. Of course, automated reconciliation process is expedited and has less risk of error.

Here’s a look at the steps involved:

1. Collect the Data

In order to have anything to match and compare, you need the data available. When executed manually, this step tends to take a lot of time because you’re stuck looking for information across systems and/or desktops.

You also run the risk of using outdated data from spreadsheets. Alternatively, by deploying SolveXia, you can bank on always having up-to-date data that is automatically pulled through integrations with your existing systems.

2. Transaction Matching

Next up, you must compare the records between internal and external documentation. SolveXia can do this in minutes, as opposed to hours or days.

3. Reconciliation

For any records that aren’t in alignment, reconciliation means finding out why and making the required edits.

4. Finalization and Posting

Once all the records are in order, you can close the books by posting your records to your internal ledger to then be used for financial statements.

What are the Challenges of Reconciliation?

With the heavy importance placed on the act of reconciliation, it cannot be without its own fair share of challenges. We’ll soon see why any automated reconciliation process can help to overcome these challenges, but first, let’s address what they could involve.

1. Disparate Data

One of the greatest hurdles that businesses face when conducting the reconciliation process is handling the data. With the sheer influx and volume of data occurring and the multiple systems in place, it can feel like a never ending feat to have all data in one place.

This is particularly problematic if you have a high volume of transaction and are using multiple payment processing services like Amazon, ebay, Worldpay, Stripe, etc each with their own bank statement.

Since the first step of account reconciliation is data collection, it can take a lot of time, energy, and manpower to collect without automation software involved.

2. Timing Delays

There tend to be delays between the time you deposit a check to the time it displays within your bank account. In turn, it could be very possible that your balance on your internal ledger and bank statement don’t match up at the time of reconciliation.

3. Manual Errors

Manual mistakes are plausible and common when it comes to internal documentation. If a mistake has been made, the process of reconciliation will surely help to spot it.

With automation everything is mapped using pre-defined rules, and discrepancies are alerted in real time with full audit trails and version history, reducing errors by 90%.

4. Missing Transactions

Sometimes, transactions have been made but they weren’t added to internal documentation. These missing transactions will cause mismatched balances.

What are the Benefits to Automate Reconciliation Process?

The automated reconciliation process has the potential to dramatically transform your business for the better. Since this is a process that you conduct continuously and with great importance, optimizing it with automation software opens the door to grand improvements, both immediately and over time.

Finance automation software like SolveXia connects your data systems, automates transaction matching, and ultimately, saves your team a ton of time. With an automated reconciliation process, you have the opportunity to:

1. Standardize Your Process

Whether your team is working at home, in an office, or across geographic borders, templates and workflows will standardize the process. The rule-based workflows help to improve internal control.

2. Error Reduction

With automation at the helm, you can say goodbye to manual errors. This helps to reduce regulatory and compliance risk and enhance the confidence you’ll have when referring to your financial statements.

At the same time, you will be able to trust the status of your company’s finances at any point in time.

3. Audit Trails

When conducting an automated reconciliation process, all the steps that occur are recorded and withheld within the system. This makes audit trails easy to pull, for both internal and external parties that wish to review what took place.

4. Enhanced Transparency

Since the reconciliation process takes place in so many steps and often touches many hands, stakeholders, managers, and executives may wish to see what’s happening and where the process is at.

With automation software, they are granted the visibility to do so. SolveXia tracks the process and allows anyone with access to see its standing.

What are the Best Tools to Automate Reconciliation Process?

Does it sound too good to be true? It’s not! The best automation tools provide a host of benefits and come neatly packed in a tool that’s easy to use. Let’s take a look at a solution like SolveXia.

SolveXia is a finance automation platform that offers an array of solutions, including automated reconciliation. Along with expense management, rebate management, regulatory reporting, APRA reporting, and more, SolveXia connects your existing systems and provides an out-of-the-box tool for your finance needs.

1. Save Time

With the ability to deploy SolveXia in under 30 minutes, the productivity gains are seamless and immediate. There’s no need for a dedicated IT team either because the software has an easy-to-use interface with drag-and-drop functions.

For example, when you want to set up your reconciliation workflow, you can choose from a library of pre-built templates to design your process.

2. Reduce Key Person Dependencies

Since SolveXia is built to run the process for you, you never have to worry about your key responsible person or team causing delays because they are out sick or on vacation. With automation, you remove the risk of key person dependencies.

3. Connect Data and Systems

When you’re ready to run the reconciliation process, sit back and let SolveXia do the heavy lifting. With an extensive amount of integrations, SolveXia pulls together data from your existing technology, including legacy systems. At the same time, you gain the advantage of neatly stored audit trails and version history, so you always know you’re using the most up-to-date data.

4. Automate Reporting

SolveXia conducts transaction matching and notifies you of any records that don’t match so that you can figure out why. Once all your records are in order, you can even automate reporting so that stakeholders, managers, and the C-suite can access the information they need to make informed business decisions.

5. Maximize Resources

It’s really as simple as that! With SolveXia in place, your finance team has more time to focus on the strategy and responsibilities that require human thought, while leaving the repetitive and data-heavy tasks to the system.

Final Thoughts

It’s simple to automate reconciliation process with the right tool by your side. Once you deploy automation software, you can alleviate the burden of reconciliation (and other complex processes) from your team. Check out all the solutions that a reconcilation tool like SolveXia can provide to your team.

With SolveXia deployed, you’ll be able to free up your team’s time to focus on high-level responsibilities and even has the potential to improve employee satisfaction. It’s a win-win for the business and its people!