The dullness and tediousness prevents you from dodging penalties and scooping up benefits. If your Account Reconciliation was secure, quick and spot on, you would not only keep indirect penalties (and true penalties) at bay, your financial department would be more proactive in your business future.
Account reconciliation is one of the most underappreciated finance governance controls at your disposal. It is often over-looked because it’s a time-consuming and mundane task: checking accounts against payments. But the benefits of good reconciliation and the potential penalties for poor reconciliation make it a necessity for any financial department.
Timely account reconciliation should not be seen as just a preventative measure – it can also provide some great benefits to your business.
Gaining visibility and monitoring your key financial processes can lead to significant improvements in your financial planning and overview. This in turn can help move away your finance department from a the reactive work into a more proactive department – using expertise and know-how to develop and deliver valuable strategic insight.
The Penalties, penalties and penalties
On the face of it, it may appear that the only potential penalty for incorrect financial reporting is loss of revenue from the erroneous accounts.
– But this is only the immediate ‘penalty’ effect of poor account reconciliation.
There are lots of examples of companies making reconciliation mistakes – a rather famous one came last year as a small spreadsheet error caused the London Olympic Organising Committee to oversell an event by 10,000 tickets. They then spent their Christmas 2011 contacting ticket holders to make other arrangements, incurring a huge cost. A more timely reconciliation would have highlighted the problem sooner and have limited the damage Check out the true cost of spreadsheet errors in accounts reconciliation in our free infographic.
– And the risk is only getting bigger, why risk such ‘penalties’?
The convergence of new national and international financial regulation bears heavily on business and requires even tighter oversight of financials. Bodies such as the European Financial Reporting Advisory Group (EFRAG) and the International Accounting Standards Board (IASB), along with country-specific regulatory bodies, are beginning to enforce many new accounting standards that, if unmet, could incur huge fines.
– Why risk penalties such as these?
To summarize, poor reconciliation practices can easily lead to mistakes that incur huge fines, additional auditing fees, a drop in stock price as well as other costs for rectifying any damage.
Automating Account Reconciliation
One way to ensure a timely and accurate monthly close is to invest in automatic account reconciliation software. Good account reconciliation software will integrate into your existing enterprise resource planning (ERP) solution to deliver results directly to your business-planning tool.
As well as easier, quicker account reconciliation, automation software also centralises your accounting practice and creates an improved audit trail – bringing the power of financial reporting into the heart of your business.
Don’t waste time worrying about reconciliation mistakes, automate your reconciliation and save man hours!
Download our free, no obligation ebook: The hidden cost of manual bank reconciliation
If you would like to make 2013 the year to improve your financial processes then speak to Adra Match today or request a demo of Adra Match Accounts – our automatic account reconciliation software used by over 3,000 European businesses.