Finance functions undergo account reconciliation to ensure accuracy of transactions and statements. Running a finance department equates to having many responsibilities and concerns, especially those that deal with compliance and regulations like reconciliation. With reconciliation automation, it’s possible to expedite the account reconciliation process (and in turn, the financial close process) while also enhancing accuracy, improving compliance and promoting transparency.
Let’s take a look at what reconciliation software brings to the table.
Account reconciliation is the process of comparing two sets of records or data to see that they match. In business, this may be performed daily, weekly, monthly, quarterly or annually. Any notice of mismatched data must be investigated and rectified so that the sets of records are considered to be reconciled.
Because of the amount of transactions and data that passes through oftentimes disparate systems, it’s possible for errors to occur. Said errors will end up affecting an organisation’s financial statements, which could have serious consequences both when it comes to legal outcomes, as well as business decisions.
Reconciliation automation is the application of software to automatically complete the reconciliation process, as opposed to having to do it manually. Reconciliation tools leverage the power of robotic process automation and artificial intelligence (with the help of APIs) to be able to pull data from multiple sources and compare records quickly. Not only does the system perform account reconciliation with utmost speed, but it also removes the risk of human error, making it an accurate process.
The software will then alert its users when any anomalies occur for the purpose of investigation. Users have the ability to edit and note the cause of the discrepancy. The system stores any external inputs for documentation, which ensures compliance by creating audit trails.
By incorporating automation, finance teams free up all the time they would’ve otherwise spent manually comparing records. In many instances, this takes place via Excel spreadsheets, which can cause issues with version control, collaboration and makes standardising the process a tricky task.
To overcome the challenges of manual account reconciliation, automating the process proves its value and importance the moment you begin using reconciliation software. While the tool cuts the time it takes to perform a reconciliation manually, it also takes care of your employees’ opportunity cost. Instead of their time being spent on a repetitive task that could be more accurately completed with software, they now have the time to allocate their high-level skills in arenas that genuinely require human interaction.
Additionally, some organisations understand that the time-consuming nature of manual reconciliation isn’t feasible on a frequent basis. As such, they’ll delay and spread out their reconciliation process quarterly or even annually, as opposed to daily, weekly or monthly. This can cause serious issues when data doesn’t match because it’s even harder to find the reasons why. Even worse, with inaccurate data, decisions may have been made that otherwise wouldn’t have been the case if the data was right in the first place.
With automated reconciliation, organisations can increase their reconciliation frequency. By ensuring accurate data on a continuous basis, the organisation’s leaders can make better business decisions that impact employees, stakeholders and customers.
The value added with the addition of reconciliation automation tools is hard to miss. Here, we’ve compiled the major benefits that your organisation will reap when you apply reconciliation automation:
While it is possible to perform manual reconciliations well, it’s naturally time-consuming, error-prone and elicits the need for much oversight.
By manually performing this task in any interval, your team may encounter challenges, like:
Cloud-based reconciliation tools, like SolveXia, can be used and applied to any type of reconciliation your organisation may need to fulfill. These could span:
Knowing how and where to get started in automating the reconciliation process doesn’t have to be overwhelming. Taking it step-by-step makes it easier.
Consider the following if you’re looking to enhance your team’s reconciliation process:
Once you decide on the software to deploy within your organisation, it’s important to focus on three areas, namely:
Reconciliation automation can supercharge your team’s output by increasing productivity, enhancing accuracy, improving transparency and reducing compliance risk. With the freed up time that would have otherwise been spent performing manual reconciliation, you can open the door to a team of individuals who can provide more value, while gaining superior satisfaction from the work they get to perform.
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The balance sheet reconciliation process can be streamlined and standardised simply with the use of financial automation solutions.