Account reconciliation periods are notorious for being stressful, time consuming and full of unexpected surprises. But in today's technology-driven business landscape, this doesn't have to be the case.
With the right tools, processes and approaches, you can execute an account reconciliation process that's built on automation and high levels of collaboration across your finance team. In this blog, we'll provide actionable solutions to some of the most common reconciliation challenges companies face today.
Finance teams handle a lot of data. This presents a particular challenge for account reconciliation because of the disparate nature of the data sources finance teams must pull from to close, including the GL as well as sub-ledgers such as accounts receivable, accounts payable, fixed assets and more.
When these live in separate systems and spreadsheets, the data collection process is time consuming, difficult and riddled with manual, error-prone processes.
For financial reporting, this simply isn't an option. Manually updating data in your templates leads to incomplete reporting and inaccurate forecasting. Not to mention, it significantly slows the account reconciliation and period-end close processes as your teams search for missing information.
Research confirms how critical this challenge can be. According to SAPinsider's most recent Financial Close Transformation Benchmark Report, 75% of finance professionals rated more unified data and automated reconciliations their companies' top current priorities to drive transformation and improvement.
SAPinsider also found that improving efficiencies, eliminating manual and spreadsheet-heavy tasks and consolidating financial operations into a single system are the top actions companies are taking to transform their overall finance and accounting functionality.
Image Source: SAP Insider
With a cloud-based solution that seamlessly integrates with your GL and sub-ledgers, your workflows can be largely automated, data can easily be pulled from multiple sources and centralized and inefficiencies can be eliminated from your processes.
Cloud-based financial close management solutions enable you to streamline data flow across your organization and eliminate the manual processes that slow your account reconciliation process down.
A faster close also powers more active planning, so you'll depend less on stressful quarterly reconciliations and more on collaborative, updated numbers and plans.
Excel is a powerful tool for finance teams, but an over-reliance on siloed spreadsheets leads to data inconsistencies, time-consuming cross-checking and stressful account reconciliation.
In fact, the average FP&A professional spends 75% of their time collecting data and only 25% performing actual analysis that adds value for their organization. This translates to scrambling during reconciliation periods, employee burnout and excessive labor costs for organizations.
Automating data entry with a cloud-based financial management solution eliminates the need to collect and combine data in the eleventh hour. These solutions can pull data from multiple data sources and spreadsheets, streamline formats and centralize everything in a shared database so it's visible for everyone who needs it during the account reconciliation process. Instead of manually updating your actuals on all your spreadsheets, you'll be able to spend more time analyzing your accounts and making observations.
One missed deadline can create bottlenecks throughout your entire account reconciliation process and make it impossible for other employees to move forward. In reality, enterprises deal with way more than one missed deadline at any given time, which undoubtedly leads to frustration and delays in getting to close. What's more, those delays have a cascading effect on your processes that depend on having actuals, such as creating forecasts and monitoring the business's performance.
Drive accountability across your organization by documenting policies and procedures and sharing them with every employee that touches the account reconciliation process. Keep them visible in shared repositories and detail who is responsible for completing which steps in practice.
Leverage comprehensive financial close management solutions that can manage workflows and assign tasks for you and show real-time views into progress updates across teams and departments.
Avoid the perception of micromanagement by emphasizing ownership for each employee over their individual responsibilities. Focus on how the completion of individual work contributes to larger company success and celebrate milestones and small wins along the way to build culture and morale.
Allowing employees to follow "their own ways" of doing things can have a ripple effect that leads to larger inconsistent processes that fight against each other rather than work together to complete account reconciliation. Often, these inconsistencies begin with leaders who have preferred ways of running their teams or departments.
This problem leads to the risk of missed data, gaps in the reconciliation process and ultimately, inaccurate numbers, plans and forecasts that could result in poorly-informed decisions.
Use standardized templates for various types of reconciliations to ensure consistency over time and across teams. Look for a financial close management solution that can create and automatically update these templates for you and make them available to all your team members through the cloud.
When teams operate in silos, they often have varied views of your organization's financial and data "truth" at any given time. When people are operating and making decisions based on inconsistent views, this puts your business's financial state at risk.
Silos also stifle collaboration by hindering shared understanding across your finance teams and with business leaders and teams in other parts of your company.
Cloud-based financial close management solutions provide a single source of truth that everyone on your finance team can utilize to make decisions and reconcile accounts.
You can use permissions and access controls to ensure that the right people are able to edit and update particular datasets and dashboards, while still allowing them to be visible to larger teams. This takes the guesswork out of version control, a common challenge created by traditional financial close management processes.
With a fully integrated, cloud-based solution, data automatically updates in one centralized place, so you know you're looking at the most up-to-date version of every report.
As a result, your team gains a single, shared understanding of your company's current financial state. They can also make better decisions and work more seamlessly together to achieve shared goals√¢‚Ç¨ÔøΩ - such as on-time account reconciliation.
There's one primary theme that's clear across the account reconciliation challenges we've covered—the need for automated cloud-based solutions. Given the decentralized nature of operations due to remote and hybrid work environments, cloud-based tools are no longer a nice-to-have but an essential key to business success.
As the above account reconciliation challenges and solutions have demonstrated, finance is no exception to this reality. Taking the manual data consolidation out of account reconciliation with automation empowers your finance teams to move past administrative work and to spend more time investigating exceptions and performing value-adding analysis. As a result, you'll drive greater agility and better decision making.
Vena for Account Reconciliation gives you the shared platform you need to execute an efficient, accurate and collaborative account reconciliation process. Start your free 7-day trial today to explore firsthand how Vena can help you close faster and produce more accurate financial reports.
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