Delicious meals can be created from many disparate ingredients that seemingly have no connection at the start. Similarly, in an accountant’s work, transactions come in from all over the company (and sometimes the world) and must be reconciled together in the big “pot” that is the General Ledger (GL). The time-consuming process of GL reconciliation is painfully necessary, but not always efficient.
Creating a great meal begins with a great recipe, and the same principle applies to GL reconciliations. For accounting and finance, we’ll call this consistent and controlled workflows. When you rely on manual processes, you’re relying on static spreadsheets, one person’s post-it note chain, another’s whiteboard reminder and whole bunch of other “unique” tactics to come together to produce reliable financial statements on a regular basis. This type of workflow inevitably leads to headaches, miscommunication and misstatements. You can vastly improve the GL reconciliation process by implementing automation and updating everyone’s habits into a communicative digital flow of timely information.
Automated workflows do more than just align individuals’ note-taking methods – they also ensure employees adhere to required controls. Whether reconciling internal or external data, all rules must be followed and documented in turn. Setting proper controls within the workflow streamlines the general ledger reconciliation process, creating accountability on the journey to achieving company goals and continual efficiency.
Now that your notes are aligned and your key controls are in place, it’s time to turn to matching. In a perfect world, transactions would come in orderly sets spaced throughout the year. But inevitably they sometimes pile up and overwhelm your staff, especially at year end for retail and restaurants. Automating the matching process, such as detailing exceptions and adapting to your unique business environment, saves your staff both time and money; two precious commodities.
Automating the matching process streamlines the GL reconciliation process by implementing standardization. A common component of standardization is prepared templates, keeping information easily digestible. As with workflows, standardization ensures that everyone is taking the correct steps and communicating clearly, quickly reducing risk.
When preparing for an audit, prepared templates help your auditors easily compare data across functions and time periods. Furthermore, if you need to pull historical data, an automated documentation process keeps it easily accessible.
Audits may never become fun, but they can be less painful. To be ready, the general ledger reconciliation process must be well-documented throughout each step. With automation, Journal Entries (JEs) are easily tracked throughout the reconciliation process. Formerly, JEs may have been left unnoticed on one person’s desktop. With automation, the system pulls together all relevant documents as part of a cohesive digital whole, helping to lower the company’s chance of financial risk in an audit.
Many chefs consider themselves more artist than scientist, but accounting professionals prefer organization to improvisation. Automating the general ledger reconciliation process will allow you to streamline workflows, improve internal controls and lessen risk, ensuring less headaches for both you and your auditors. With automation, reconciliation should be the perfect platter for your deliciously complete close process.
To learn more about overcoming key challenges in your general ledger reconciliation process, check out our solutions.
Written by: Chelsea Downey