Banish 4 time-consuming accounts reconciliation problems areas
There are a number of reasons why account reconciliation might be held-up each month – yet many of these hold-ups are completely avoidable. If any of these issues sound familiar to you then you have an in-built inefficiency that constantly creates the need for hard work.
1. Infrequent reconciliation
How frequently are you performing your sub-ledger account reconciliations? Only when specifically required, randomly as needed, or regularly? Timely reconciliation of each account ledger can help you find errors faster and speed up your overall reconciliation process.
Try reconciling your routine accounts very regularly – even daily if possible. This will make your monthly close that much faster!
Also, identify key accounts that regularly present complications and check the account’s history (i.e. turnover, number of transactions, any potential for mis-statement or extra work necessary to close them) and ensure you are cutting down on your time spent carrying out on these particular areas. If there seems to be a pattern of problems with certain accounts then you should prioritise these for an easier close process.
2. Poor data management
As your organisation grows, operations become more complex and the sheer amount of data requires new solutions.
Managing data with spreadsheets can have seriously detrimental results, like this risky run of manual reconciliation errors at global investment bank, JP Morgan.
JP Morgan were using spreadsheets to calculate their value-at-risk (VaR). Manual entries had left dates and incorrect amounts littered throughout the spreadsheet. Left unchecked, these mismatched entries led to incorrect VaR calculations leaving the bank overexposed. The mistake was only rectified when another member of the investment bank spotted the erroneous amount and flagged it to the CIO!
Standardising processes and forms within all business units is a good place to start when managing large amounts of data. Encourage all employees to take responsibility for accurate reporting, including sales staff, and make sure everyone provides all the supporting documents necessary for accounting staff.
Reconsidering your use of spreadsheets is another way to seriously speed up your account reconciliation – not to mention vastly improve accuracy! Find out more about the dangers of using spreadsheets in accounts reconciliation.
3. Financial reconciliation regulation changes
Changes in staff and changes in regulation can slow down your account reconciliation considerably. Beyond regular training to stay updated on regulatory changes and providing refresher courses for employees, consider creating a peer review system within your accounts department.
A second pair of eyes checking your reconciled accounts as you go helps to spot errors while giving newer employees confidence knowing someone else is checking their work.
4. Awareness of changing business needs
Over time business needs and processes change. New goods, new services, new customers, new suppliers, new markets. How are your systems keeping up? Are they slowing you down?
Current processes and legacy software may no longer fit your business needs, and software can often require time-consuming manual workarounds just to achieve the desired results.
This need for manual tinkering often creeps up slowly, a bit at a time, and goes unnoticed until someone finally asks: “Why do we do it this way? Why do we work around the software instead of the software working for us?”
Automate the hold-ups away
Automated reconciliation software eliminates these timely manual adjustments. It matches data automatically and learns how to automatically correct recurring mismatched data from past rules and exceptions. Not only does this speed up your account reconciliations, allowing you to reconcile your accounts more frequently, it also dramatically improves accuracy of your reporting helping to avoid potential fines, lost revenue and damaged reputation.
Best of all, market-leading reconciliation software is available on the cloud so it’s cost effective and accessible any time.
If you’re ready to speed up your account reconciliation download our free ebook: ‘control your financial transaction flow’ today and see how automated solutions can eliminate your reconciliation hold-ups.
What’s holding up your account reconciliation, and what strategies have you found to speed them up? Comment below or drop Adra Match a Tweet.