How to Break Up Monthly Reconciliation into Manageable Pieces

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Increasingly tough regulations have made completing an accurate, timely monthly-end close even more grueling and complicated. To achieve a faster close, it’s important to prioritize your key accounts first and foremost.

All accounts need to be reconciled monthly, whether you only have a few or too many to count. Monthly close reconciliations are a race against time—a balancing act between both speed and accuracy. As many accountants know, too much time can’t be spent on thought and organization. If you stop for a single moment, you might fall far behind.

Just as a child cuts their meat into bite-sized pieces, the reconciliation process can be chunked into smaller, more manageable parts. This not only saves time but reduces the workload, especially as the tasks begin to add up (i.e. the notorious “aged unreconciled items”).

Distinguishing key from non-key accounts is a good way to divide the monthly reconciliation process. But what is the difference between them?

Determining Key Accounts

A key account could be:

  • Bank accounts and similar accounts

If you come back from your lunch break and a stationary purchase was made that doesn’t match your bank statement, at least one other account is wrong. This will have a deep impact on your financial reconciliation.

  • Sub-ledger accounts such as accounts receivables or accounts payable
  • These tend to be key accounts, as they affect other processes. If an error stems from a sub-ledger account, even if it’s just a small mistake, it can create problems further into the reconciliation process. The more complex the journal entry, the more accounts it impacts.
  • If selling goods is vital to your organization, industry dependence may also be a factor in identifying a key account, and the sub-ledger for your stock will be a key account as well.

Closing Key Accounts

Establishing which accounts are key accounts helps you arrange your list of priorities. By fixing the key accounts first, you fix a large source of errors, thereby lessening the number of mistakes in your monthly reconciliation. This saves you an immense amount of time and money. If you are a small company, perhaps with 100 accounts, this method might seem excessive and unnecessary, but you will be glad to have this procedure already if you grow to have over 1,000 accounts.

Another way to make monthly reconciliation easier is to reconcile a large key account halfway through the month. Because balances or invoices filed for the first half of the month are unlikely to change, you could reconcile again in the second half of the month.

Reconciling Key Accounts—The Smart Way

Yes, this can all be done using spreadsheets, but it is neither an efficient nor effective practice.

Automated financial close software can help ensure your key accounts are prioritized in addition to reducing your financial risk by creating a streamlined process and set of tools for tasks such as transaction matching and account reconciliation. This way, you save time and money by allowing your accountants to focus on other responsibilities that require a higher level of human intuition.

To learn more about automating your accounts reconciliation process, visit our solutions.

Written by: Ashton Mathai