With the hectic month-end close process and regulatory pressures mounting, doesn’t it make sense to have formal written reconciliation policies? Nope!

Despite the hectic chaos of the month end close, many companies still do not have any written policies.  And all companies should… Really, shouldn’t they?

There are strong reasons for not having them:

  • ‘Policy’ is usually interpreted as offering an overall guiding. But then the policy contains what most reconciliations preparers and approvers already know. So where’s the guidance?
  • To offer proper guidance, the policies must be long and specific on different reconciliation challenges. But the longer the easier neglected and forgotten. And aged. Finally collecting dust in a distant mounted network hard drive folder and what a shame, after all, someone went to all the effort to write it.

It does have its advantages though

Obviously, having formal written reconciliation policies does have its advantages:

  • A written policy provides a quick-reference point for what to do, perhaps how to ensure reconciliation steps are being carried out in the correct successive order.
  • A written policy also help to reduce errors by providing clear visibility of expected steps throughout the process.
  • Legal compliance is better maintained (if the policies are obeyed, that is).

month end close, reconciliation policyThe greatest benefit

A great benefit of written policies, however, is in training new or temporary staff. Say, for example, a staff member falls ill during the month-end close process. In this unfortunate situation you might need to draft in temporary replacement staff that won’t be familiar with your templates, approvers, and archiving processes. The rest of your staff – yourself included – are busy completing the monthly close process, and even if you did have the time to walk them through the process, would you confidently say you remembered to tell them everything?

Written formal policies could be the key. But then again, as soon as the reconciliation policies are detailed enough to fulfil these high staking aims, they are neglected, aged and forgotten.

A smarter month-end close process

The Alexander-the-Great cut to the intricate Gordian knot (shame of you for not knowing your Greek history) is not a reconciliation policy, but a reconciliation procedure and the Balance sheet reconciliation software, BALANCER, a perfect add-on to any Cloud Accounting software or to any ERP system (Enterprise Resource Planning system). 

A “procedure” is the tight and short instruction, yes, but not the overall policy. And you need many. One for each account type, sub-type or even one per account. Here’s an example for Accounts Receivables ‘doubtful’:

accounts reconciliation process, accounts receivable, accounts receivable doubtful

Where the Alexander-the-Great cut finally conquers the issue, is in when it is integrated with software. Balance sheet reconciliation solution, BALANCER makes it possible to have the procedures registered on every account. As the reconciliation preparer starts the job on each account, then just that account’s short and specific reconciliation procedure is not more than a mouse click away. As the preparer certifies the reconciliation, it is to attest that this specific procedure has been applied. As the approver is to approve, this procedure is there easing the approval. As the internal or external reviewer logs in and checks ….for every account its own reconciliation procedure, is just a mouse click away, helping in checking if each account is properly reconciled.

The Balance sheet reconciliation software, BALANCER from Adra Match allows for custom compliance rules to be updated easily, making the system as flexible as is needed. By using the software the financial close process is consistently completed, whether it is new staff completing the processes or veterans. Hence, it is difficult not to follow the procedure: The prepares and approvers knows their certification is done towards each account’s procedure and that the audit trail function is there to trace it.

Additional benefits of BALANCER include:

  • Full control over the month-end close process
  • Simplified compliance with regulation such as SOX
  • A quicker close process
  • Increased productivity with reduced risk

Get to grips with the full range of benefits BALANCER provides by watching this short demo video.

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