May 8, 2023
Reconciliation is the process of verifying the completeness of a transaction through matching a company’s balance sheet to their bank statement.
Comparing and verifying transactions on a company’s records to their bank account records is something finance teams across industries do. A common issue is that companies have to deal with delays and wait times associated with payment methods like ACH, wires, and checks. These delays make it hard for businesses to get an accurate picture of their entire cash flow. delay makes it difficult to match changes in their account balance with a business’s own record of the payment and its context, such as date and purpose.
Typically accounting and finance teams use the general ledger to track how well a company performs financially. They compare the most recent transactions to the previous ones, investigate discrepancies, and bring in all the numbers for the balance sheet. But this kind of manual reconciliation is time-consuming and excessively prone to errors, which can end up offering an entirely incorrect depiction of the corporation's financial health.
When done manually, reconciliation becomes an inefficient and time-consuming process as teams end up wasting hours over ensuring the financial statements are accurate. PwC reports that 30% of a company’s finance team’s time is spent on manual reconciliation. Moreover, around 95% of this effort is wasted on transactions that are already properly aligned, as opposed to focusing on anomalies that require attention. An Aberdeen Group research shows that companies can easily reduce the time teams spend on reconciliation by half by simply automating the process.
The more a business grows and scales, the more complex it becomes to manually manage and keep track of its cash position, transactions and cash flow in spreadsheets and other disparate systems. Having a solid understanding of cash flow is critical to being able to forecast and plan for future financial positions. Spreadsheets fail to provide the visibility and insights that are needed to support business growth objectives.
By employing RPA technology, Sancode technologies has helped corporations improve the integrity of their financial statements while speeding up reconciliations and eradicating the risks inherent in their earlier manual processing.
RPA can pull data from Excel spreadsheets, accounts payable and accounts receivable systems, purchase orders, bank statements, and other data formats in real-time, completing reconciliations for bank, clearing, credit card, intercompany, and other accounts, saving teams significant time by matching thousands of transactions automatically.
Auto bots establish audit trails for all transactions as per multi-jurisdictional accounting standards, which can make preparing for audits easy. Accountants can achieve a centralized view of the reconciliation status of each account, with balance comparisons, preparers, reviewers, and sign-off dates with time-sensitive notifications when reconciliations are due, ready for review, and/or detect an unexpected out of balance condition.