Imagine a finance team that isn’t drowning in spreadsheets and manual reconciliation at the end of every month. Instead, they operate with a clear, real-time view of every transaction. They don’t just react to discrepancies; they proactively identify them.
Their audits are a breeze, not a burden, because every financial record is clean, organized, and instantly verifiable. This isn’t a distant fantasy – it’s the new standard for financial operations. This ideal scenario is what modern businesses are achieving with the help of automated account reconciliation.
In this guide, we will delve into the reconciliation process in detail, highlighting the hardships faced by accounting teams and the numerous hours spent on various spreadsheets and financial data for reporting and audit purposes and how platforms like FinRecon are changing the game.
What is the account reconciliation process?
The accounting team compares the company’s internal financial records with the corresponding entries in the external documents to spot discrepancies or errors, such as missing or duplicate transactions. In simpler terms, all the economic data is gathered and then matched. In the event of errors, an investigation is required.
The records must then be adjusted and verified to make sure they align with the total balance. The accounting team then records the reconciliation process, and if any discrepancies are found, specific actions are taken for future reference and audits.
How to do reconciliation in a smarter and faster way?
To thrive with state-of-the-art technology and make account reconciliation a much easier and speedier process, why not move beyond basic automation? Many businesses have already adopted entry-level solutions, but the true transformation comes from upgrading to a platform that makes the process more strategic and proactive.
Platforms like FinRecon are built with ML-based OCR models and an AI-Powered Document Reader to make the reconciliation process seamless and efficient by:
- Providing customised and controlled workflows to help businesses tailor the reconciliation rules as per business needs.
- Helping to accommodate data from various data sources, including databases, APIs, and common file formats like Excel, CSV, and PDF. It can also extract and read files from emails.
- Improving data extraction accuracy from unstructured documents to enable the platform to handle a variety of document formats.
- Offering real-time data import and comparison of all transactions involved.
- Presenting a comprehensive view of the reconciliation status on a dashboard to support data-driven decision-making.
- Smart Reconciliation Reporting to help depict the number of reconciliations running, records processed, exceptions, records requiring user action, ageing reports, forecasting, etc.
- Providing a complete audit trail of all reconciliation activities to help businesses meet regulatory requirements.
It must be noted here that the platform also offers a strong case management feature where the reconciliation exceptions can be assigned to the respective teams for resolution.
FinRecon for Seamless Finance Operations
Businesses should opt for automated account reconciliation as FinRecon comes with multiple advantages, such as better data visibility, improved operational efficiency, and reduced manual efforts. The platform plays a major role in:
- End-to-End Reconciliation Automation: This helps the finance team get rid of repetitive tasks and spreadsheet drudgery.
- Multi-Way Transaction Matching: Accurately match invoices, bank statements, ledgers, and more in no time.
- Automated Tolerance Management: Identify any deductions and flag discrepancies, and handle exceptions in real-time.
- Advanced Analytics and Real-time Alerts: Dashboards to see financial data as a statement or report.
- Automated Data Extraction and Data Entry: To ensure that the financial information is accurately recorded and easily accessible.
Why do we need automated account reconciliation?
Swift planning requires instant action. So is the case for automated reconciliation. Let’s learn why there is an intriguing need for businesses to switch to automated account reconciliation platforms:
- To standardise processes for improved accuracy, efficiency, and error-free operations within a system.
- For better data control and management, gain valuable insights, and tailor reconciliation rules.
- Gain real-time visibility and purpose-built reporting across reconciliation status, timeliness, and quality.
- Shift controls from detective to preventive with role-based workflows and built-in segregation of duties.
When to choose FinRecon?
If you are into retail, logistics, travel, manufacturing or even SaaS, FinRecon is the ultimate choice for –
- Seamless Integration and Comprehensive Data Capture
- Smart Algorithms and Automated Workflows
- Multi-Way Transaction Matching and Real-Time Alerts
- Simplifying complex operations like manual reconciliation
- Multi-Currency Support and Compliance
- Real-Time Analytics for accurate financial records
- Minimising discrepancies and enhancing financial control
Which one do you prefer? Siloed Data or Integrated Data for Account Reconciliation
In an age where data drives every decision, the choice between siloed and integrated data for account reconciliation is a clear one. Siloed data, scattered across disparate spreadsheets and systems, is the root cause of the manual effort, delays, and errors that plague traditional reconciliation.
Integrated data, on the other hand, is the foundation of a proactive and efficient finance function. Platforms like FinRecon eliminate data silos by consolidating information from all sources into a single, unified view, ensuring real-time visibility, data accuracy, and enabling the finance team to gain valuable insights.
Ultimately, the choice is between continuing to manage a fragmented past or building an integrated, automated, and strategically sound financial future. With FinRecon, the answer is simple: Integrated data is the only path to smarter, faster, and more reliable reconciliation.
Frequently Asked Questions
What is account reconciliation?
Account reconciliation is the process of comparing a company’s internal financial records (like its accounting ledger) with external documents (such as bank statements or invoices) to ensure all transactions match and that the balances are correct.
Why is account reconciliation important?
Account reconciliation is crucial for maintaining accurate financial records and reporting. It helps businesses:
Identify and correct errors, prevent fraud, ensure data integrity, and simplify audits.
How often should account reconciliation be done?
Account reconciliation should be performed at the end of each business cycle, most commonly every month.
What are common causes of discrepancies in account reconciliation?
Timing differences, human error, missing transactions, bank fees & interest, and fraud are some of the common causes of discrepancies.
How has automation changed the account reconciliation process?
Automation, as described by the FinRecon platform in the blog, has transformed the process by:
Increasing Speed, Improving Accuracy, Enhancing Visibility and Streamlining Workflows.