How to Improve Your Vendor Reconciliation Process
The size and scale of your business most likely dictate how quickly you can drown in the workload they create, but there are lifeboats available!
With this in mind, take a moment to see if you can answer this question – how many vendor statements does your company reconcile each year? If you don’t know, that’s a key indicator that you might be in over your head. If you came up with the number, wouldn’t you agree that it’s time to find your boat?
As a financial controller, you are probably all too familiar with the increase in workload that accompanies the vendor statement reconciliation process. With potentially tens of thousands of statements to reconcile each year, many of which can appear at any time, or even not appear at all, keeping your team afloat while ensuring accuracy is a tough task.
Up a Creek Without a Paddle – Using Makeshift Tools to Stay Afloat
According to our market survey results, finance departments often use a combination of different approaches to paddle along with the rising tide of work. However, each of these makeshift procedures suffers from serious drawbacks.
Common Alternative Methods for Reconciling Vendor Statements
Manually Scanning Statements
This is often the first step in the Do It Yourself (DIY) vendor reconciliation process – manually scanning documents into a computer system. Besides being tedious and time-consuming, this approach creates very real risks at the very beginning, something that simply cannot be tolerated because it makes the rest of the work you’ll do essentially worthless. For example, it is easy to miss scanning a single document— an error that will create a deep-seated effect on the reconciliation process.
Optical Character Recognition (OCR) software is often utilized by accounting departments to digitalize scanned statements. While far faster than manually typing out each statement, this technique still devours the reconciler’s precious time. However, the bigger problem is the error rate. On some occasions, characters can be misread by the software, producing incorrect figures. Often, a field may even show up as empty because the form was not filled out properly.
While spreadsheets can be useful, too many finance departments rely on them as their primary tool for the vendor reconciliation process. A spreadsheet can hold formulas, macros, and other functions that help to speed up the workload, but there is no way of tracking changes as they are made to the document. This can quickly lead to confusion, errors, incorrect formulas, and notable issues during audits.
Don’t Just Keep Up with Your Accounting Process – Steam Ahead!
In an ideal world, the finance department wouldn’t just aim to stay afloat – they’d be using technology to steam ahead. However, primarily because of the approaches described above, finance departments are simply treading water in lieu of a solution that is specifically built to handle this process.
Automated reconciliation software allows your accountants to quickly and securely review and reconcile vendor statements. The technology will bring standardization to your statement input, digitalize your archive and generate a reliable audit trail along the way – making your financial decision-makers’ jobs much easier and carefree. This not only funnels the flood of vendor statements directly into the correct channels, but improves your internal auditing, daily processes, and employee workload.
To learn more, check out our reconciliation software.
Written by: Ashton Mathai