Bank Reconciliation Software:

0
1941

Why You Need it for Your Business

What is the purpose of a bank reconciliation?

Simply put, bank reconciliation is used when comparing your cash transaction records to those of your bank to verify if there are any discrepancies. Your book balance – the ending balance in your version of the cash records should equal the bank balance – the bank’s version. It is common for the two to have different balances, which you will need to trace and adjust in your records.

To do this process manually is time-intensive, to say the least. In the long-term planning of your business, if this is not automated, it will eventually need to be to create efficiencies in your finance department.

Today’s challenge is in achieving faster and more reliable closes. Given today’s complexities in payment gateways, systems, and transactions, it is becoming more important to look at automating your bank reconciliation process sooner than later.

Excel was excellent in the day, but…

Depending on your business, you may be finding excel to be a bit of a challenge if you run into the following:

  • Difficulty in the oversight of segregation of duties
  • Compliance and Governance risks
  • The complexity with multiple users working simultaneously
  • Importing data issues with formatting and programming
  • Human error input risk
  • Not adaptable to change in procedures or complexity
  • It can become cumbersome with hundreds of tabs to use.

Bringing an automated process onboard can shorten the financial close. Additionally, it can monitor everyone’s activities, define milestones, procedures, and more. Your finance team will then have time to refocus and begin challenges in current operations or strategic planning and execution.

Automated (cloud-based) solutions can help

Automation can help tremendously with speeding up your reconciliations while increasing accuracy and freeing up time for the department. Bank reconciliation software will easily handle transaction matching, allowing you to drill down on any open entries or exceptions requiring closer scrutiny.

The vastly popular choice of all solutions involves using cloud-based technology with tools to assist in overall reconciliation, such as:

Bank reconciliation: Staying on top of any differences in bank statements where matching software will quickly identify questionable transaction mismatches.

Foreign currency: Currency of the business and global rates are managed automatically to reconcile discrepancies.

Direct payments: Automated reconciliation will handle this transaction-intensive payment standard, avoiding your finance department from being overwhelmed with bank statements monthly.

Balance sheet substantiations: Cloud-based systems today can replace many manual steps, giving your team the ability to track all accounts regardless of the number of companies, banks, and businesses.

Inter-company accounts: Many factors complicate internal balance reconciliation. These will increase with the number of companies, currencies, and considerations involved.

Advantage of automation

  • A platform of fully automatic reconciliation processes with reporting at any time during an accounting period.
  • Personnel independent where delegated responsibility can be shared
  • Final account specifications completed
  • All records of reconciliation are logged with an audit available anytime.
  • Uniform approach to the number of companies, banks, businesses, and accounts.

Final Thoughts

Depending on your business needs, some organizations consider bank reconciliation to be critical to the business enough that it is done daily. For companies who work with minimal cash reserves, automated bank reconciliation is the best solution to have as any mismatched balances are immediately brought to the surface to avoid any variations from going on too long and causing significant imbalances that would be difficult to investigate and backtrack manually. 

 

Comments are closed.