{"id":5915,"date":"2021-06-07T14:35:21","date_gmt":"2021-06-07T14:35:21","guid":{"rendered":"https:\/\/www.trintech.com\/best-practices-enhance-reconciliation-process\/"},"modified":"2025-09-04T19:42:52","modified_gmt":"2025-09-04T19:42:52","slug":"best-practices-enhance-reconciliation-process","status":"publish","type":"post","link":"https:\/\/www.trintech.com\/blog\/best-practices-enhance-reconciliation-process\/","title":{"rendered":"5 Best Practices to Enhance Your Reconciliation Process"},"content":{"rendered":"
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5 Best Practices to Enhance Your Reconciliation Process<\/h1>\n

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Reconciling accounts is one of the key elements to \u201cclosing the books\u201d at the end of the accounting period. While a necessary component to every close, reconciliations<\/a> often take up a large portion of the entire process, with accountants tediously reconciling each financial figure through spreadsheets. When utilizing manual methods, reconciliations take several days, if not weeks, to complete.<\/p>\n\n\n\n

But reconciliations don\u2019t always have to be quite so time-consuming. Implement these five best practices to further enhance and optimize your account reconciliation<\/a> process.<\/p>\n\n\n\n

Best Practice #1: Establish a Risk-Based Policy<\/h2>\n\n\n\n

Reconciliations occur on an ongoing basis, from daily and weekly all the way up to quarterly. No matter the frequency of reconciliations<\/a>, establishing an efficient and effective risk-based policy is crucial to reducing errors and risk throughout the close.<\/p>\n\n\n\n

Risk ratings can be driven by several factors relating to an account. A low-risk<\/a> account may be based on the month-over-month variance of the balance or the difference between the general ledger and sub-ledger ending balances. On the other hand, a high-risk account could be defined by a debit balance existing when credit is expected, where there has been a higher-than-usual variance in the balance of the account, or when the same reconciliation failed a peer review in the prior period. Establishing these key factors between a key and a non-key account is instrumental in having a standard policy and procedure to follow.<\/p>\n\n\n\n

By defining low- and high-risk accounts and differentiating the two with specific factors, finance and accounting teams<\/a> can establish a priority list for accounts as they reconcile. Rather than approaching all account reconciliations with the same level of precision, teams should focus more of their time on high-risk accounts. These higher-risk accounts typically have a greater risk of error, meaning they have a larger impact on the accuracy of financial reports.<\/p>\n\n\n\n

Implementing policies isn\u2019t a one-time process; to consistently improve financial close processes and ensure all accounts are accounted for, leaders should be evaluating these risk-based policies on an ongoing basis.<\/p>\n\n\n\n

Best Practice #2: Standardize the Reconciliation Process<\/h2>\n\n\n\n

Each time reconciliations are performed, accountants follow a series of steps to ensure they\u2019re accurately recorded, documented, and reconciled. This repeatable process relies on standard procedures to ensure it is done accurately each and every time. Implementing a standardized reconciliation process<\/a> is instrumental to reducing risk, reporting errors, and onboarding new employees.<\/p>\n\n\n\n

Whether you\u2019re implementing a template that everyone in the finance and accounting department follows or a process to substantiate transactions, every organization should have an outlined and standardized reconciliation procedure. Similar to establishing a risk-based policy, organizations should also continually analyze their existing reconciliation process to identify any gaps or opportunities for automation<\/a>.<\/p>\n\n\n\n

Best Practice #3: Streamline Reconciliations with Financial Automation<\/h2>\n\n\n\n

Technology has no doubt made a significant impact on how businesses operate and interact. Even though automation is often positioned as the \u201cultimate solution\u201d for ensuring accurate reporting and access to predictive insights, process standardization is still imperative to its success.<\/p>\n\n\n\n

Rather than relying on manual data entry into spreadsheets, reconciling transactions, sending spreadsheets via email<\/a> or a shared site, then getting the accounts approved, F&A teams can drastically improve their workflows by implementing automation into a standardized reconciliation process. Financial automation then supplements that process by streamlining data integration, highlighting discrepancies, automatically reconciling low-risk accounts, and providing a centralized solution for close task management<\/a>. In addition, financial automation also enables financial leaders to gain real-time insights into the progress of the close while visualizing the number of accounts for the specified period as well as the timeline and workloads for preparers and reviewers.<\/p>\n\n\n\n

While not a miracle solution for all, organizations must realize the importance of automating manual, status quo processes throughout the entirety of the financial close. <\/strong><\/p>\n\n\n\n

Best Practice #4: Assess Key Performance Indicators<\/h2>\n\n\n\n

Numbers are important to any organization, whether they\u2019re in the form of cash flow, net income, profit and loss, and more. Just as these financial figures are critical to evaluating the current state of a business, key performance indicators<\/a> (KPIs) are crucial to assessing the performance of the financial close.<\/p>\n\n\n\n

When going through reconciliations, whether through manual or automated processes, it is important to track those KPIs. Some examples of KPIs include the time required to complete reconciliations for a high-risk account or the average time needed to prepare vs. approve for a selected period.<\/p>\n\n\n\n

Focusing on KPIs enables financial leaders to get an overview of how reconciliations are performed from start to finish and assess any potential gaps in the process. Leadership can then make adjustments to improve workflows as well as report on those key metrics and bring them to C-suite executives.<\/p>\n\n\n\n

Best Practice #5: Make Continuous Improvements to Workflows<\/h2>\n\n\n\n

Reconciliations are a necessary yet repetitive process for every organization. As transactions flow in and out of the business, the likeliness for bottlenecks<\/a> and workload imbalances to occur is often high, meaning financial leaders must continuously evaluate their processes and make improvements as needed.<\/p>\n\n\n\n

Perhaps there\u2019s a preparer that has a large number of high-risk accounts to reconcile and keep track of, while another accountant has a smaller number of low-risk accounts. The standardized policies require high-risk accounts to be reconciled on a monthly basis, while the lower-risk account is reconciled twice a year. This workload imbalance not only provides added stress to the high-risk preparer but also minimizes productivity for the low-risk preparer. Workflow imbalances can also delay the completion of the close and affect the quality of financial reporting. By making continuous improvements to close workflows, organizations can effectively increase productivity and reduce the overall stress<\/a> on their finance and accounting teams.<\/p>\n\n\n\n

By implementing these five best practices into your reconciliations, F&A teams can further improve and optimize their reconciliation methods. With the added benefits of time savings, risk reduction, balanced workloads, and performance analytics, any organization will be a force to be reckoned with.<\/p>\n\n\n\n

Written by:<\/strong> Alex Clem<\/em><\/p>\n\n\n

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Find this content helpful?<\/h2>\n \n

If you loved this blog, there\u2019s more where that came from! Discover additional ways that Trintech can help you streamline your financial processes:<\/p>\n \n <\/div>\n\n

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\n \n \n Impacts of Financial Automation <\/span>\n <\/a>\n \n \n Business Benefits of Automated Reconciliations<\/span>\n <\/a>\n \n \n Streamlining General Ledger Reconciliations<\/span>\n <\/a>\n \n \n 5 Month-End Close Best Practices<\/span>\n <\/a>\n \n \n Intercompany Accounting Best Practices<\/span>\n <\/a>\n <\/div>\n <\/div>\n
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Reconciling accounts is one of the key elements to \u201cclosing the books\u201d at the end of the accounting period. While a necessary component to every close, reconciliations often take up a large portion of the entire process, with accountants tediously reconciling each financial figure through spreadsheets. When utilizing manual methods, reconciliations take several days, if not weeks, to complete. But reconciliations don\u2019t always have to be quite so time-consuming. Implement these five best practices to further enhance and optimize your account reconciliation process. Best Practice #1: Establish a Risk-Based Policy Reconciliations occur on an ongoing basis, from daily and weekly all the way up to quarterly. No matter the frequency …<\/p>\n","protected":false},"author":31,"featured_media":29758,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false},"categories":[621],"tags":[106,623,105,107],"topic":[],"product":[82],"class_list":["post-5915","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-automation","tag-best-practice","tag-financial-transformation","tag-month-end-close","target-user-controller","content-type-listicle-checklist","product-adra"],"acf":[],"lang":"en","translations":{"en":5915,"fr":43673},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/posts\/5915","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/comments?post=5915"}],"version-history":[{"count":0,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/posts\/5915\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/media\/29758"}],"wp:attachment":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/media?parent=5915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/categories?post=5915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/tags?post=5915"},{"taxonomy":"topic","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/topic?post=5915"},{"taxonomy":"product","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/product?post=5915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}