As you probably know, your account reconciliations form the foundation of your financial close and establishing best practices for this process provides a reliable beginning for everything you have to handle during the period end. However, if you are still managing your reconciliation processes manually with spreadsheets and even off-line documentation, you’re getting further and further from accomplishing this goal on a daily basis.
Indeed, for every piece of manual work there can easily be user error found between a human and a computer’s work. Furthermore, accountants are often saddled with repetitive tasks in equal measure to the complex tasks that should be their focus. Adhering to manual processes limits their full range of achievement.
So, how can you streamline your reconciliation processes to realize the efficiency gains of, and fully utilize, your accountants’ higher-level skillset? This blog examines the challenges and opportunities connected to dealing with manual reconciliations. To start, let’s look at some of the usual reconciliation suspects.
The list below details a few prime examples of account reconciliations and the detailed processes inherent to each. Though they are each unique, they all have one key thing in common—manually completing these reconciliations places an unnecessary, mind-numbing burden on your employees, as well as creating unnecessary additional risk for your company. We will go into more detail on the current process for handling reconciliations in the next section.
|Bank to Book Reconciliation||Daily matching process between entities to detect fraud and ensure the accuracy of cash records
Ex. Daily bank statement reconciliation
|Prepaid Reconciliation||Expenses paid at the start of the year for services to be delivered throughout the year
Ex. A subscription service or a yearly membership
|General Ledger Balance Sheet Reconciliation||Reconciling the general ledger to the subsidiary ledger
Ex. Zero balance accounts for reporting accuracy
To see more detailed explanations of reconciliations, visit our Account Reconciliations Page.
As mentioned in the introduction, when too many people work individually without connection and communication, inefficiencies result. Each preparer has their personal “method” of account reconciliation when working with a manual, spreadsheet-based process that’s essentially independent of how their colleagues may perform similar tasks. In the short-term, these disparate styles will result in inaccurate reviews and minimal time to investigate discrepancies.
And, what’s more, these various methods will lead to long-term audit risk due to missing documentation, inconsistent processes that lead to mistakes and a heavy workload that doesn’t provide much room for attention to detail. Overall, uneven work allocation and repetitive tasks do not allow accountants to analyze and interpret data to their full potential. Set your organization up for success by launching account reconciliation best practices.
Instead of using spreadsheets to handle your reconciliations, automation can provide a way to standardize this process in a way that is also configurable to all types of reconciliations and their unique attributes.
To learn more about account reconciliation best practices, download our eBook.
Written by: Chelsea Downey