Account Reconciliation Meaning 101: Back to Basics
The reconciliation process is a critical first step in the financial close and sets the foundation for period end success. However, due to its impact on all subsequent close activities, many find reconciliations to be an extremely stressful process that results in using more resources than planned for completion. In some organizations, nearly the entire Finance and Accounting (F&A) team must drop everything and reconcile. But, will it always be this way?
What is the ultimate goal?
Account reconciliations are a necessity to ensure overall financial integrity. Every F&A organization strives to consistently complete its reconciliation process efficiently and without errors. When handled poorly, this can snowball into larger issues later in the close. An efficient and effective reconciliation process is not impossible though. Organizations that establish a strong system of controls within the finance department are successfully achieving both efficiency and effectiveness throughout their close processes.
By ensuring internal and external systems of record are in total alignment and standardizing processes, you can provide a strong foundation for the entire close process. This starts with reconciliations, and subsequently supports organizations’ growth initiatives and external reporting requirements.