General ledger reconciliation is a process that verifies the accuracy of account balances in a company’s general ledger. The process is a crucial step in performing financial close. Reconciliation can be time-consuming and relies on keen attention to detail. With the power of automation solutions, businesses can harness the power of centralising data and automating general ledger reconciliation.
The general ledger stores every transaction that happens within a business. Known as the “books,” each transaction gets documented twice, once as a credit (addition) and once as a debit (subtraction).
Since the general ledger serves as a company’s main accounting record, it’s vital that general ledger reconciliation takes place in a timely and verifiable manner. While it sounds easy to do because it involves matching records, it requires that all data is easily accessible. Furthermore, it can be a time-consuming process if done manually. When finance teams work on reconciliations across a company, it could cause issues down the line if there is a lack of standardisation. We’ll get into how to easily resolve these concerns with the aid of automation solutions.
Following the end of a financial reporting period, an accountant or team of accountants is responsible for conducting general ledger reconciliation. This means that the team goes through each account and checks it against third party statements, like bank statements and credit card statements to ensure they reflect one another.
With data coming from various sources, the data may appear in a variety of formats. Some companies will pull from multiple ERP systems, internal databases and bank accounts. When you factor in the time it takes for a person to manually pull the right data, you see how easy it is for inefficiency to occur.
With a software solution like SolveXia, you can connect any system, database or file so that all information is automatically transformed into a standard structure. Then, data aggregation and cleansing takes place so that the software can run reconciliation in minutes.
The general ledger reconciliation process consists of aggregating data, comparing records, updating information, investigating discrepancies and documenting the process. In many instances, a bookkeeper or accountant performs reconciliation.
However, it’s a process that most high-level executives need to be privy to because the information gleaned from a reconciliation does impact major business-wide financial considerations and decisions. That’s why if a company performs its reconciliations in silos with little transparency, the entire business may suffer the consequences of having incomplete access to important information. Automation solutions prevent this from occurring by supporting transparency (more on this later).
First, let’s take a look at the general ledger reconciliation process step-by-step:
Put simply, general ledger reconciliation software automates the entire process so that you need little to no human intervention. The software compiles data from all sources (i.e. ERP, bank statements, credit card statements, general ledger systems). It transforms data to be formatted in the same structure for easy comparison.
When data matches up, it will certify it’s correct. If data shows discrepancies, it will alert the responsible party of the issue. In a manual process, when an issue comes up, it requires that the person stop matching all the accurate data to find the source of the issue for the anomaly. With a reconciliation software tool, the matching data will continue to be processed as the discrepancy is being investigated. It allows for your team to focus on high-level tasks and only be involved when an issue arises. Then, every piece of the reconciliation process is documented, recorded and saved. It can be used for historical reference, auditing, and as a way to standardize the process company-wide.
Software solutions can save accounting teams about 50% of their time and resources that would otherwise be dedicated to bank reconciliations alone. The market is growing rapidly and automation solutions like SolveXia are meeting needs to transform finance automation by providing teams with a full suite of benefits, including:
General ledger reconciliation is a repetitive and necessary process. As such, it is perfectly suited to be handled automatically with a software solution.
Here’s a look at some common challenges concerning general ledger reconciliation and how automation software like SolveXia can solve them:
These are just some of the many benefits that come along with implementing a high-level finance analytical automation solution like SolveXia. A process like general ledger reconciliation is a given in your business, so it’s worthwhile to invest in a solution that will work for you immediately.
General ledger reconciliation is a process that every business manages. Rather than wasting time and risking meeting regulations through manually performing the process, you can leverage the power of automation tools like SolveXia. Reconciliation software will maximise efficiency, centralise data, automate reconciliations, and store data to create real-time visualisations, reports, dashboards and credible audit trails. See how automation solutions can work for your business by scheduling a demo.