Automated Reconciliations: How to Achieve Full Automation

Finance Leadership

There’s a lot of moving pieces, including massive amounts of data, in the account reconciliation process. With automated reconciliations, your team can save time, maximise productivity and reduce compliance risk. 

There’s really no reason why not to use reconciliation tools, so let’s talk about all the reasons why you should be incorporating this technology within your organisation and how to do it seamlessly. 

What is Account Reconciliation? 

Account reconciliation is the process of matching your organisation’s general ledger and its respective financial statements with external financial statements, like bank accounts and credit cards, for example. 

This process is naturally time-intensive and requires utmost attention to detail. It’s been reserved for bookkeepers and accountants, but with bank reconciliation automation, software can handle the heavy lifting. In turn, your valuable employees can use their time more wisely by applying their expertise to business challenges and solutions, rather than the tedious and repetitive tasks of reconciliations. 

Benefits of Account Reconciliation

If you’re working in finance, then account reconciliation is typically regulated and mandatory. But, even if it weren’t, most businesses would still choose to perform this duty because of its immense benefits, namely:

  • Reduces errors: It’s possible for internal financial statements to have errors. It’s also possible that your bank makes an error with your transactions. Account reconciliation is a surefire method to help highlight any errors and rectify them in a timely manner. 
  • Tracks expenses: You’re probably paying lots of bills and vendors on the daily. But, these payments don’t get deducted immediately, so you may forget they’ve been made. You can better track deductions from your account with recurring reconciliations. 
  • Saves money: Reconciling accounts can save you money directly. Without the process, you may never realise that you’re being charged bank fees or hidden expenses. If you know these avoidable expenses exist, you can help to avoid having to pay them. 
  • Avoids financial issues: It’s understandable that humans make mistakes. But, when it comes to business doings, it could be detrimental to your bottom line and your reputation. You always want to make sure that you have enough to cover expenses, and by conducting at least monthly reconciliations, you can successfully track revenue and expenses. 

What is Robotic Process Automation? 

The extensive use cases for finance automation software can be traced back to robotic process automation (RPA). Robotic process automation is the driving force and technology that makes it possible for computers and software to perform repetitive tasks. In most cases, there’s barely any need for human intervention once the software has been trained on what to do by following a human’s pattern. 

RPA robots capture data, can trigger responses and also integrate with other systems and communicate inputs to reap outputs. They can log in, copy and paste data, move files, fill in form fields, and pull structured data from existing documents or browsers, to name a few functions.

Their main application is for repetitive tasks that happen continuously and have expected outcomes. This is why RPA is so perfectly fitting for financial departments. Most of the daily duties of any finance team is filled with manual, repetitive, data-heavy and timely responsibilities. RPA alleviates these tasks and manages them so that your human workforce can focus on more pressing measures. 

What are Automated Reconciliations?

RPA bank reconciliation automates the bank reconciliation process. It applies RPA so that the software can pull data from your financial statements and compare it easily with external data sources, like bank statements. 

With automated reconciliation, you can expedite the financial close process. Furthermore, you can rest assured on the accuracy of the data because there’s no possibility of human error. Accountants are able to quickly compare statements and are alerted if there’s any anomalies. The system will trigger human intervention if there’s any need to investigate discrepancies. Humans work with the system to upload documentation, if needed, to resolve any mistaken records. 

Examples of Automated Reconciliations

There’s a lot of different accounts to manage when running a business. Whether you’re dealing with various currencies, a multitude of suppliers, direct payments or the like, automated account reconciliations can be utilised for whatever type of reconciliation process you may need. No matter the frequency and complexity, RPA helps to lighten your load.

Some examples of automated reconciliations include:

  • Bank reconciliation: Ensuring that your bank statements match your internal records. 
  • Direct payments: Direct payments mean more multi-page statements that need to be checked. 
  • Foreign currency accounts: Software can help to manage the ever changing differentials between currencies. 
  • Balance sheet substantiations: No matter how many companies, banks, businesses and accounts that you have, automated balance sheet substantiations makes it easy to keep track of all the figures. 
  • Inter-company accounts: If you work in multiple currencies or across companies, automation helps to maintain accurate accounts without complication.  
  • External suppliers: Maintaining relationships with external suppliers and vendors means paying on time and getting the figures right. Automation tools make this possible without hassle. 

Importance, Benefits and Value of Automated Reconciliations

Automated reconciliations are helping finance teams be more productive. Even more so, automated reconciliations serve as one step along the journey to achieve digital finance transformation. With the ability to automate repetitive tasks, finance professionals can expand their roles as advisors and strategic business allies. 

Here’s a review of some of the main benefits of using reconciliation tools: 

  • Standardisation: Since the reconciliation happens continuously, it’s really important that the process be standardised across an organisation. Whether your organisation takes advantage of finance shared services or has disparate finance teams around the world, automating the process inherently translates to standardisation.
  • Visibility: Reconciliations aid the finance department in ensuring activities and transactions are taking place as they should be. But, they also play a larger role in showcasing the financial health of a business. As such, key stakeholders will want access to this information, as will investors. Automated solutions like SolveXia offer an easy way to share reconciliations either automatically or on a schedule with those who need to be privy to the information. 
  • Processing time: One of the most easily noticeable benefits of finance automation tools is the time they save. For example, reconciliation tools like SolveXia’s automation software has been shown to have 10x productivity because of the speed at which it can process records and data. 
  • Centralisation: Reconciliations provide valuable historical data that can be used for forecasts and modelling. Additionally, they may be required for audits. As such, it’s best to have all reconciliations centrally stored in a repository for easy access at a moment’s notice.  
  • Accuracy: If you use a manual process to double check other manual processes, you’re not fully eliminating the risk of errors. Instead, utilise the power of RPA and automated reconciliations to ensure data accuracy, in turn, also minimising compliance risk. 

Why Automate Reconciliations? Difficulties of Manual Reconciliations 

With every external system and transaction that takes place, there is room for manual error. Manual reconciliations turn out to be one of the most time-consuming, and in turn, costly processes that companies must perform. 

What’s worse is that most of the time, this effort is spent matching transactions that are actually correct. In which, time feels ever more wasted. 

Besides the error-prone risk of a manual reconciliation process, your organisation may also suffer from:

  • Allocating and separating duties 
  • Complicated formatting 
  • Miscommunication between teams 
  • Sticky procedures that are hard to modify when need be 
  • Data loss and missing information 
  • Governance and compliance risks 
  • Complexity when trying to collaborate or share information (i.e. problems with version control)
  • Difficulty creating reports 
  • Missed deadlines 

How to Get Started with Automated Reconciliations

With any change to your organisation’s processes, there will be a required amount of effort, investment and buy-in. However, once you pass the initial hurdles of buy-in, you’ll be able to show ROI practically immediately. 

To get started with automated reconciliations, here’s a checklist of steps to keep in mind:

  • Assess your current needs, capabilities and goals 
  • Outline your current account reconciliation process 
  • Highlight where there are gaps or room for improvement 
  • Design the type of account reconciliation process you’d like to achieve and how you can measure success 
  • Research available software solutions (check out automation tools like SolveXia for more information)
  • Support your team with the rollout (training, communication, etc.) 
  • Ensure that the software is scalable 
  • Test the software out before rolling it out organisation-wide 

The Bottom Line 

Account reconciliation is a necessary process in organisations. As such, it’s not going anywhere. But, the time it takes to complete manual reconciliations can be allocated optimally by implementing automated reconciliations. Automation tools like SolveXia can help you pull all that data you need, match transactions rapidly and only alert your employees when an exception or variance is present. Most importantly it saves time, improves accuracy and gives clearer insights for better business decisions.