Choosing to automate reconciliation presents firms with both a challenge and an opportunity: the challenge of staying competitive and the opportunity of dramatically improving efficiency, Cash flow and client service.
Reconciliation is commonly undervalued and not given enough attention, seen as an annoying – but necessary – task that should not be worried about but in reality, It not only adds to front-office performance but also is crucial to consumer satisfaction and back-office profitability.
The process of reconciliation at many companies is an inefficient, labor-intensive, and risky one, where staff has to pore over multiple spreadsheets and track each transaction manually.
Further, the competitive ability is severely limited by this approach. In the quest for greater productivity, performance, efficiency, and profitability, companies can transform reconciliation processes and implement best practices to achieve the aforementioned outcomes.
If the right solutions and processes are implemented, automating reconciliation can bring significant benefits. So what does the setting up of a best practices reconciliation environment entail?
This can be accomplished by following the five-step process described below.
The first step should be to standardize existing processes so that the reconciliation team can easily create a structure to meet the requirement.
The ultimate goal of automation is to automate as many of the processes as possible. However, this step in conjunction with step 2 is crucial to the success of automating the operation.
Whenever possible, it is also important to standardize the process of exception management.
This step is intended to ensure that relevant data is collected and organized in a structured manner.
The reconciliation teams can use this to identify gaps in standardized processes and take corrective action wherever needed.
Failure to implement this step effectively could be the difference between success and failure in recon automation.
The next step is to choose the tools to automate reconciliation. Finding the right people/software to automate is the first step in this process.
It is very important to talk to people who understand the business nuances and then plan the actual process automation.
Therefore, the software will be able to solve business problems as it will be designed by people who understand the complexities of the business.
Following implementation, ongoing reviews and improvements will ensure that the solution remains relevant in ever-changing market conditions and will continue to satisfy the needs of users.
Regardless of whether you’re talking about revenue, profits, or cash flow, numbers are vital to any organization. In the same way that these numbers are crucial to a business’s current state, key performance indicators (KPIs) are crucial to a financial close’s success.
It is important to track those KPIs when initiating reconciliations, whether manually or automatically. An example of a KPI is the average time it takes to prepare/approve for a selected period.
In conclusion, These five best practices will help your reconciliation teams add value to their reconciliations and optimize their reconciliation methods even further. Any organization that utilizes performance analytics will enhance the efficiency of time-saving, risk-reduction, and balance of workloads.
Moreover, automated reconciliation is one of the most important profit-building strategies for companies. Paperwork is eliminated and money is saved. In order to increase cash flow and reduce receivables, we can optimize the reconciliation process in order to utilize more funds.
In today’s world, reconciliations help companies better understand their current position, as well as maximizing idle cash.
Automated reconciliation is the future of payments and collections. A concept that will change how companies do business, and how they profit from it.
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