Why Business Needs Automated Reconciliation Software


The benefits of automated reconciliation software are many. Automating your financials can reduce errors, reduce time spent reconciling, and increase visibility. 

Reduces Risk Of Financial Fraud

One of the most effective ways to reduce the risk of financial fraud is to conduct regular checks on your financial statements. This can be done either weekly or daily, depending on your business level. You should also number your checks consecutively. Checking your bank statements regularly will allow you to identify fictitious vendors who may be mailing you payments or unlogged payroll checks. Fraudulent vendors can also cash your checks. Small businesses are particularly vulnerable to fraud since they have fewer oversight procedures and controls. Furthermore, small businesses are more likely to suffer from multiple types of fraud than larger companies because even small events can affect cash flow and cause a huge mess. As such, it is essential to implement effective fraud prevention methods; utilizing quality banking software can help reduce your risk significantly.

Reduces Time Spent Reconciling

A reconciliation solution can solve more than one problem. It can also help you explore new business areas, such as subscriptions. For example, instead of manually going through each account, you can automatically set pre-defined rules to match and clear transactions. The system will also keep track of the total number of transactions for each customer and vendor and any other transactions that require manual reconciliation. Typical account reconciliation software procedures are based on pre-determined rules and routines. Each adjusting entry must be accompanied by supporting calculations and documentation. Closing balance reconciliation is also done to ensure that the balances are equal. These solutions can streamline the reconciliation process and improve accuracy. They can also reduce the amount of time your accounting team spends on reconciliation.

Reduces Errors

Using reconciliation software reduces errors. As you might expect, manually reconciling transactions will result in more errors. This can lead to costly mistakes such as undetected cyberattacks or unreconciled transactions. Automated software can significantly reduce the number of errors while allowing for higher reconciliation frequency. These are just a few of the many benefits that automated reconciliation software offers.

When comparing the various features and functions of reconciliation software, look for the following: AI and machine learning. Both of these capabilities enable reconciliation software to learn and apply smart matching methods, reducing human intervention. Also, automated reconciliation software can help increase the speed of business processes by making them simpler and faster.

Improves Visibility

Using specialized software can streamline the process of reconciling financial statements. For example, embedded reconciliation tools can be added to your ERP system, so you don’t have to worry about setting up a second set of authorizations or security measures. However, avoid the most common mistake when choosing a reconciliation solution. An enhanced reconciliation software improves visibility. Manual reconciliation can be difficult to monitor, and the process can result in unreconciled transactions and undetected cyberattacks. In addition, automated reconciliation solutions can help you better track your accounts, ensuring that your financial statements are always up to date.

Reduces Costs

Automated reconciliation software saves the company both money and time. The manager’s time is significantly reduced using this software. In addition, the computerized system is tested against a specified number of documents. It can also help reduce the costs of audits. To understand the benefits of automated reconciliation software, you should compare the costs of using manual processes.

The common risks with cashless payments like credit card reconciliation include:

  • Missing or wrong settlements
  • Incorrect refunds
  • Over/Duplicate charging of customers
  • Time-consuming reconciliations on bulk, non-transactional level leading to write-offs
  • Timings and cut-off discrepancies between Point of Sales (POS) and bank settlements
  • Several Acquires and Payment Service
  • Providers (PSPs) with different file formats and layouts
  • Varying tax requirements

To minimize write-offs and prevent P&L impact in incorrect periods, discrepancies not related to timing should be dealt with immediately.

What can you do to improve today?

Below is a best practices checklist of things to consider when reviewing and improving reconciliation management:

  • Analyze your month-end close process from top to bottom.
  • Map out all reconciliations. Is anyone doing double work? Is anything forgotten?
  • Who does what? When do they do it and, most importantly: why?
  • Are processes and procedures noted down?
  • Establish materiality across all operational and financial reconciliations — where should emphasis to be placed?
  • Are there any transaction reconciliations being done that could be automated? Consider acquiring bespoke transaction matching software to save time and cost.
  • Analyze the documentation and reconciliation of the balance sheet for all legal entities – on which companies and what accounts should emphasis be put?
  • Consider acquiring balance sheet reconciliation software to keep track of account frequencies,. ownership, risk rating, procedures and documents.

Are you ready to look at improving your reconciliation processes using automated cloud-based software? Contact us to schedule a personalized demo!

ALSO SEE : Everything You Need to Start a Food Packaging Business


Please enter your comment!
Please enter your name here