Being in business means keeping your business on the books. General ledger reconciliation, or GL reconciliation, is necessary to know that your financial statements are accurately reflecting your financial status and health. In some cases, an expert bookkeeper can perform this critical routine, and in others, a trained CFO or controller must step in. Luckily, with automation software, GL reconciliation has become more accessible, faster and more accurate.
Let’s take a look at everything there is to know and how automation software can help you manage your GL reconciliations.
Coming Up
1. General Ledger Reconciliation - Defined
2. What is General Ledger Reconciliation?
3. What is the GL Reconciliation Process?
4. Benefits of GL Reconciliation
5. GL Reconciliation Software: How it Works
6. Streamline Reconciliation with Automation
General Ledger Reconciliation - Defined
The general ledger stores all financial transactions of a company. Commonly and informally referred to as the “books,” the general ledger is your company’s main financial record. As such, it’s undoubtedly necessary that transactions are input and stored correctly.
In the general ledger, every transaction is recorded twice, once as a debit and as a credit. General ledger reconciliation is then defined as ensuring that each transaction is recorded correctly and placed in the appropriate account as a credit and debit.
GL reconciliation comes along with some pain points. The accuracy of data is the most crucial aspect because the GL represents the business’ financial status and is often published to shareholders and released into the market. Incorrect entries can lead to detrimental decision-making, embarrassment and fines. The process, when performed manually, is time-consuming and prone to manual errors. However, with an automation solution like SolveXia, you can process huge amounts of data and match records within minutes. Not only do automated GL reconciliations save time, but they also make it easier to compare historical data to figure out discrepancies.
What is General Ledger Reconciliation?
General ledger reconciliation is the process of comparison between accounts and data. Those tasked with the process will have to verify the books against other financial documents like statements, reports, and accounts. Many companies use subsidiary ledgers, which are most commonly the accounts receivable and accounts payable ledgers. The general ledger reconciliation will require that subsidiary account balances match up properly with the general ledger.
To optimise efficiency and standardisation, it’s best to have a general ledger reconciliation process documented. Since it’s a repeated process at each financial close, it should be completed promptly and at the same time each month to maintain consistency. The reconciliation policy serves as a form of internal control.
What is the GL Reconciliation Process?
As stated, it’s best practice for every organisation to have its general ledger reconciliation policy outlined. However, it should follow some standard guidelines. The GL reconciliation process tends to look something like this:
- Understand policy: First and foremost, whoever is conducting the GL reconciliation process will have to understand the company’s policies. From the accounting principles used to how to depreciate equipment, for example, it’ll be essential to know to perform the reconciliation properly.
- Gather information: Compile all necessary documentation. This could include a bank statement, cancelled checks, subsidiary ledgers, the general ledger, etc.
- Review data: At the heart of the GL reconciliation process is ensuring that the documentation is accurately reflecting the transactions that have occurred. If you see anything that’s unusual or suspicious, it’s essential to perform the investigation as soon as possible to ensure there’s no fraud or errors. If you can pinpoint what is missing or erroneous, you’ll be able to take corrective action. This could mean that you’ll make a journal entry to fix the error.
- Cross-check: Once you’ve investigated any anomalies, you’ll cross-check documents to make sure that everything is recorded and updated as it should be.
- Document work: Since reconciliation is a regulated aspect of the business, you’ll need to make sure that you’ve detailed what you’ve done, including any corrective action that’s been taken. Not only does this include making notes of any records that were updated, but it also means that you should have a clear roadmap for the next time reconciliation is performed.
- Get approval: GL reconciliations may be performed by controllers, bookkeepers or someone else who has been delegated the task within the company. Once it’s complete, there’s typically a review process to double-check that everything is kosher. The reconciliation process is only complete once it’s received a stamp of approval. It’s also essential to do promptly because companies can’t release financial statements until GL reconciliation has been finished.
Benefits of GL Reconciliation
GL reconciliation is a necessary process that is mandatory for businesses. It’s needed to meet filing deadlines, ensure accuracy of books, and fulfil month-end financial close procedures. GL reconciliation provides your business with:
- Accuracy: GL reconciliation is a basis to check all financial statements and make sure they are correct.
- Prevention: An easy way to spot anomalies or fraud/errors while they are still in a timeframe to be managed and resolved.
- Adjustments: An overview of spending which will allow for better decision-making and allocation of funds to improve your business’ overall financial health.
GL Reconciliation Software: How it Works
As you know, the GL reconciliation process can take up a lot of valuable time. Since data is stored across multiple sources and must be compared side-by-side, manual reconciliation is less than optimal. Without software, it means that your team is spending time to both locate source documentation and then go through it line by line. Luckily, GL reconciliation uses the power of technology and automation to make the process efficient.
GL reconciliation software imports necessary data from all systems, including ERP and General Ledger systems, credit card statements, banks and all other sources of value. It automatically compares the data. It’ll auto-certify when data matches between sources. If data is inconsistent, it will identify and alert your team. This way, your financial team can spend their time on high-value tasks and only be involved in the process when needed for investigative purposes. From data importation, comparison and storage, the software system can do it all.
The top of the line GL reconciliation software provides your business with:
- Automated reviews and workflows
- Safe storage of data and information
- Audit trails
- Storage of all applicable policies for reference
- Reconciliation templates and easy ways to standardise the process
Streamline Reconciliation with Automation
Automation solutions make GL reconciliation easy, timely and error-free. The GL reconciliation is streamlined and controlled when you introduce automation solutions like SolveXia. SolveXia’s process-centric application will handle your data processing and matching. It can reduce the time it takes to reconcile accounts by as much as 98%!
The system stores the reconciliation as a process that is easily managed and deployed. As the reconciliation occurs, your team will be notified when exceptions need to be reviewed, corrected and approved. The visualisation tools also make investigations even more transparent so that they can be completed more quickly. Once completed, the process is stored and can be executed automatically as directed. This takes care of standardising the GL reconciliation process.
Every reconciliation runs through the system and is reflected by a dashboard that can be read by any user with access at any time. With a centralised data storage system, SolveXia’s automation solution will pull data from all integrated systems. That means no more disparate or missing data! The powerful cloud-based software can reconcile millions of transactions in just seconds and then connect all reconciled data between systems.
While GL reconciliations are necessary for the financial close process, they also play a massive role in helping make financial decisions. With SolveXia’s reports and visual dashboards, you can track and compare your company’s spending and income. This is more than just information for information’s sake. It offers actionable insights. Dashboards can be customised and presented to executives for a clear and timely overview of how the business is performing in real-time.
The Bottom Line
The GL reconciliation process can be streamlined and performed with accuracy with the help of automation solutions. All businesses must have accurate books. Your financial status impacts your decisions. With business moving quickly, it’s beneficial to ensure that your finances are in order so that you can make the right decisions.
With automation solutions like SolveXia, you can perform accurate and timely reconciliation processes in no time. From data integrations to secure data storage and easy-to-read reports, there’s nothing you’ll be lacking when it comes to GL reconciliation.
To see how SolveXia can help your company perform its GL reconciliations, request a demo!
