{"id":6288,"date":"2021-10-26T14:54:59","date_gmt":"2021-10-26T14:54:59","guid":{"rendered":"https:\/\/www.trintech.com\/why-your-business-needs-automated-reconciliation\/"},"modified":"2024-07-23T18:04:05","modified_gmt":"2024-07-23T18:04:05","slug":"why-your-business-needs-automated-reconciliation-software","status":"publish","type":"post","link":"https:\/\/www.trintech.com\/blog\/why-your-business-needs-automated-reconciliation-software\/","title":{"rendered":"Why Your Business Needs Automated Reconciliation Software"},"content":{"rendered":"<div  class=\"resource-hero-block alignfull\" >\n\t<div class=\"maybe-wrapper\">\n        <div class=\"hero-top\">\n            <div class=\"hero-title\">\n                <h1>Why Your Business Needs Automated Reconciliation Software<\/h1>\n                <p class=\"type\">Blog post<\/p>\n                            <\/div>\n            <div class=\"hero-share\">\n                <h2>Share<\/h2>\n                <div class=\"socials\">\n  <a class=\"email\" href=\"mailto:?subject=Why+Your+Business+Needs+Automated+Reconciliation+Software&#038;body=https%3A%2F%2Fwww.trintech.com%2Fblog%2Fwhy-your-business-needs-automated-reconciliation-software%2F\">\n    <span class=\"screen-reader-text\">Email<\/span><span class=\"icon icon-mail\"><\/span>\n  <\/a>\n  <a href=\"https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.trintech.com%2Fblog%2Fwhy-your-business-needs-automated-reconciliation-software%2F\" target=\"_blank\"><span class=\"screen-reader-text\">Twitter<\/span><span class=\"icon icon-x\"><\/span><\/a>\n  <a href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.trintech.com%2Fblog%2Fwhy-your-business-needs-automated-reconciliation-software%2F\" target=\"_blank\"><span class=\"screen-reader-text\">Facebook<\/span><span class=\"icon icon-facebook\"><\/span><\/a>\n  <a href=\"https:\/\/www.linkedin.com\/sharing\/share-offsite\/?url=https%3A%2F%2Fwww.trintech.com%2Fblog%2Fwhy-your-business-needs-automated-reconciliation-software%2F\" target=\"_blank\"><span class=\"screen-reader-text\">Linkedin<\/span><span class=\"icon icon-linkedin\"><\/span><\/a>\n<\/div>            <\/div>\n        <\/div>\n\n        \n\t<\/div>\n<\/div>\nAs time goes on, the CFO continues to step into the forefront as the CEO\u2019s partner and strategic brain of the enterprise. However, for a CFO to successfully take on a more strategic role, it requires shifting to a <a href=\"https:\/\/www.trintech.com\/ebook\/5-best-practices-for-modernizing-your-month-end-close\/\" target=\"_blank\" rel=\"noopener\">smarter, more efficient approach<\/a> to the financial close, starting with balance sheet reconciliation management.\n\n<strong>Everyone \u2014 from the CEO to other departments, investors and auditors \u2014 wants a clear view of the company\u2019s financial position. And of course, they want it in real-time and 100% accurate.<\/strong>\n\nSeven out of 10 CFOs \u2013 and worse, their CEOs \u2013 have made significant business decisions based on incorrect or outdated financial data. Let&#8217;s examine how you can avoid being part of this unfortunate statistic by leveraging automated reconciliation software to:\n<ul>\n \t<li>Increase accuracy<\/li>\n \t<li><a href=\"https:\/\/www.cfodive.com\/news\/modern-finance-goes-leaner\/646911\/\" target=\"_blank\" rel=\"noopener\">Cut costs<\/a><\/li>\n \t<li>Optimize resources<\/li>\n \t<li>Improve financial governance<\/li>\n \t<li>Close the books faster<\/li>\n<\/ul>\n<img loading=\"lazy\" decoding=\"async\" class=\" wp-image-25942 aligncenter\" src=\"https:\/\/www.trintech.com\/wp-content\/uploads\/2023\/01\/manual-reconciliation-problems1.jpg\" alt=\"Automated reconciliation software helps solve some of your biggest manual reconciliation issues\" width=\"475\" height=\"232\" \/>\n<h2><strong>Prevent Issues Caused by <\/strong><a href=\"https:\/\/www.trintech.com\/ebook\/reduce-organizational-risk\/\" target=\"_blank\" rel=\"noopener\"><strong>Manual Reconciliation<\/strong><strong> Processes<\/strong><\/a><\/h2>\nCFOs are responsible for an ever-growing number of transactions, sub-ledgers and external systems \u2014 all of which increase the chance of error, duplicated entries and inaccurate information. As their teams scramble to check debits versus credits in interim accounts, and compare bank statements against ERP data, they enter a world of costly, cumbersome transaction matching.\n\nWithout a doubt, manual reconciliation processes are the least efficient and most cost-demanding in a company. According to a survey by EY, up to 59% of a financial department\u2019s resources are spent on managing transaction-intensive processes. And around 95% of this effort is wasted on transactions that already match, rather than problem entries that actually require attention.\n\nSurprisingly in this digital age, 3 in 4 European companies with sales over \u20ac10 million surveyed by EY still reconcile data with pen and paper, or by eliminating entries in Excel. However, despite this studious approach, only around half of the 400 companies surveyed had the visibility to monitor who had done what, how, when and why. Additionally, only 42% said they prioritized high-risk accounts.\n\nIn the long term, this has to change, or organizations will suffer costly consequences.\n<h3><strong>Excel is ideal for some tasks, but\u2026<\/strong><\/h3>\nToday, the biggest challenge is achieving a faster and more reliable financial close with less resources. Many finance departments are waking up to the fact that they need automated reconciliation software with the functionality and capacity to meet growing complexity to effectively do that.\n<h3><strong>Excel presents many challenges, including:<\/strong><\/h3>\n<ul>\n \t<li>Difficulty overseeing and evaluating the effectiveness of responsibility assignment<\/li>\n \t<li><a href=\"https:\/\/www.trintech.com\/blog\/drive-accounting-value-with-esg-governance\/\" target=\"_blank\" rel=\"noopener\">Governance (GRC)<\/a> and compliance risks<\/li>\n \t<li>Complexities with multiple simultaneous users<\/li>\n \t<li>Complicated formatting and programming issues when importing data<\/li>\n \t<li>Risk of human error (between 0.8% and 1.8% on average)<\/li>\n \t<li>Inability to adapt easily to changes in procedures or complexity<\/li>\n \t<li>Cumbersome, with often hundreds of account tabs<\/li>\n \t<li>Lack of analytics and insight into the reconciliation process<\/li>\n<\/ul>\nBy introducing automated processes, CFOs can shorten the financial close, monitor everyone\u2019s activities, define milestones and procedures and more, leaving time for the strategic activities you need to prioritize.\n<h2>Optimize Your Reconciliation Management<\/h2>\nHow do leading companies in the world (like <a href=\"https:\/\/www.trintech.com\/case-study\/lkq-corporation\/\" target=\"_blank\" rel=\"noopener\">LKQ Corporation<\/a> and <a href=\"https:\/\/www.trintech.com\/case-study\/hp\/\" target=\"_blank\" rel=\"noopener\">HP<\/a>) get it right?\n\nInstead of looking at individual accounts or sub-ledgers, they constantly review their processes to improve speed and quality. Treated much like logistics planning, optimized reconciliation processes prioritize certain accounts <a href=\"https:\/\/www.trintech.com\/blog\/how-to-create-a-risk-based-reconciliation-policy-in-5-steps\/\" target=\"_blank\" rel=\"noopener\">by assigning risk levels<\/a>, clearly assigning duties, and more. All with a transparent overview.\n\n<img loading=\"lazy\" decoding=\"async\" class=\" wp-image-25941 aligncenter\" src=\"https:\/\/www.trintech.com\/wp-content\/uploads\/2023\/01\/automated-reconciliation-process2.jpg\" alt=\"Automated reconciliation software helps clearly define duties in the reconciliation process\" width=\"452\" height=\"222\" \/>\n\nAutomation can help to simplify and speed up your reconciliations while still ensuring accuracy and freeing up time in the department. Reconciliation software can manage repetitive tasks like transaction matching, giving finance and accounting teams the ability to drill down into open entries or exceptions that require additional attention, and also to develop strategic, qualitative activities.\n<h3>Automated reconciliation software is here to help<\/h3>\nMany companies are looking to automated reconciliation software tools to help reduce the risk of error and speed up the process. For example, leading organizations rely on software to support:\n<h4>Bank reconciliations<\/h4>\nKeeping track of any differences in your own organization\u2019s bank statement and that supplied by the bank can be time-consuming. Matching software can simplify and speed up the verification process.\n<h4>Foreign currency accounts<\/h4>\nWhat currency do you work in? And what\u2019s your monthly rate? Software can help convert and manage these figures, reconciling any differences.\n<h4><strong>Direct payments<\/strong><\/h4>\nDirect payment can cause your accounts department to be flooded with multi-page statements. Reconciliation is simple but transaction-intensive.\n<h4><strong>Balance sheet substantiations<\/strong><\/h4>\nNew cloud-based systems can replace manual steps, allowing you to keep track of all accounts, irrespective of the number of companies, banks, business and accounts.\n<h4><strong>Intercompany accounts<\/strong><\/h4>\nThe reconciliation of internal balances is complicated by many factors, which increase with the number of companies, currencies and accounts involved.\n<h4><strong>External suppliers and 3<sup>rd<\/sup>-Party services<\/strong><\/h4>\nReconciling the accounts of external suppliers is another challenging area.\n\nAdditionally, for industries like <a href=\"https:\/\/www.trintech.com\/ebook\/key-insights-future-retail-ecommerce-trends\/\" target=\"_blank\" rel=\"noopener\">retail<\/a> and food services, the increasing popularity of <a href=\"https:\/\/www.trintech.com\/blog\/best-practices-enhance-ecommerce-reconciliations\/\" target=\"_blank\" rel=\"noopener\">3<sup>rd<\/sup>-Party services like GrubHub and UberEats<\/a> further complicates an already labor-intensive reconciliation process.\n\n<img loading=\"lazy\" decoding=\"async\" class=\" wp-image-25946 aligncenter\" src=\"https:\/\/www.trintech.com\/wp-content\/uploads\/2023\/01\/automated-reconconciliation-3rd-part3.jpg\" alt=\"Automated reconciliation for third parties streamlines and simplifies the process\" width=\"413\" height=\"207\" \/>\n<h3>Plastic is fantastic (when your reconciliations are automated)<\/h3>\nThe world is moving to a cashless society where credit\/debit cards and online payment systems are enabling vast amounts of transactions every day. But more transactions mean more opportunities for errors.\n<h4><strong>The common risks with cashless payments like credit card reconciliation include:<\/strong><\/h4>\n<ul>\n \t<li>Missing or wrong settlements<\/li>\n \t<li>Incorrect refunds<\/li>\n \t<li>Over\/Duplicate charging of customers<\/li>\n \t<li>Time-consuming reconciliations on bulk, non-transactional level leading to write-offs<\/li>\n \t<li>Timings and cut-off discrepancies between Point of Sales (POS) and bank settlements<\/li>\n \t<li>Several Acquires and Payment Service<\/li>\n \t<li>Providers (PSPs) with different file formats and layouts<\/li>\n \t<li>Varying tax requirements<\/li>\n<\/ul>\nTo minimize write-offs and prevent P&amp;L impact in incorrect periods, discrepancies not related to timing should be dealt with immediately.\n\nThe only way to truly manage the exceptions is to compare and reconcile on a transactional level to expose individual <a href=\"https:\/\/www.trintech.com\/ebook\/5-steps-for-improving-your-credit-card-reconciliation-process\/\" target=\"_blank\" rel=\"noopener\">credit card transactions<\/a> causing discrepancies between the sources.\n\nHowever, making this change will involve potentially millions of lines of data from different sources in various file formats. Manual validation, manipulation and comparisons of such volumes in error-prone spreadsheets should be avoided at all costs.\n<h2>7 Advantages of Automated Reconciliation Software:<\/h2>\n<ol>\n \t<li>A standardized, risk-based approach irrespective of the number of companies, banks, businesses and accounts<\/li>\n \t<li>Delegated responsibilities that add clarity and reduce risk in the process<\/li>\n \t<li>A recorded trail of all reconciliation activity for the external and internal auditors<\/li>\n \t<li>Full visibility and control, including <a href=\"https:\/\/www.trintech.com\/blog\/how-to-measure-the-impact-of-your-control-environment-using-a-framework-for-compliance\/\" target=\"_blank\" rel=\"noopener\">periodic controls testing<\/a><\/li>\n \t<li>Real-time and historical reporting to analyze challenges, opportunities, and the full organizational impact.<\/li>\n \t<li>Reduced workload for Office of Finance (<a href=\"https:\/\/www.trintech.com\/white-paper\/the-business-case-for-automated-reconciliations\/\" target=\"_blank\" rel=\"noopener\">up to 90% with Cadency<strong style=\"color: #333333;\"><sup>\u00ae <\/sup><\/strong>by Trintech<\/a>)<\/li>\n \t<li>Decreased write-offs related to reconciliations (up to 62% with Cadency)<\/li>\n<\/ol>\nThe biggest benefit of implementing automated reconciliation software is the time savings it provides. Viktor Norberg, Group Financial Controller at Coor Service Management, says that automation has saved them eight days per month. That\u2019s 96 days per year!\n\nIn addition to time savings, automated reconciliation software also offers better accuracy, full traceability, and compliance. The software provides an audit trail that shows exactly what has been done, by whom, and when.\n\n[cta-content-placement]\n\nAnd, let\u2019s not forget, they now have the extra time and mental space to consider their wider strategic role within the company, and strategize accordingly.\n<h3>What can you do to improve today?<\/h3>\nBelow is a best practices checklist of things to consider when reviewing and improving reconciliation management:\n<ul>\n \t<li>Analyze your month-end close process from top to bottom.<\/li>\n \t<li>Map out all reconciliations. Is anyone doing double work? Is anything forgotten?<\/li>\n \t<li>Who does what? When do they do it and, most importantly: why?<\/li>\n \t<li>Are processes and procedures noted down?<\/li>\n \t<li>Establish materiality across all operational and financial reconciliations \u2014 where should emphasis be placed?<\/li>\n \t<li>Are there any transaction reconciliations being done that could be automated? Consider acquiring bespoke transaction matching software to save time and cost.<\/li>\n \t<li>Analyze the documentation and reconciliation of the balance sheet for all legal entities \u2013 on which companies and what accounts should emphasis be put?<\/li>\n \t<li>Consider acquiring balance sheet reconciliation software to keep track of account frequencies, ownership, risk rating, procedures and documents.<\/li>\n<\/ul>\n<strong>Are you ready to look at improving your reconciliation processes using automated software? <\/strong><a href=\"https:\/\/www.trintech.com\/book-a-demo\/\" target=\"_blank\" rel=\"noopener\"><strong>Contact us to schedule a personalized demo!<\/strong><\/a>","protected":false},"excerpt":{"rendered":"<p>As time goes on, the CFO continues to step into the forefront as the CEO\u2019s partner and strategic brain of the enterprise. However, for a CFO to successfully take on a more strategic role, it requires shifting to a smarter, more efficient approach to the financial close, starting with balance sheet reconciliation management. Everyone \u2014 from the CEO to other departments, investors and auditors \u2014 wants a clear view of the company\u2019s financial position. And of course, they want it in real-time and 100% accurate. Seven out of 10 CFOs \u2013 and worse, their CEOs \u2013 have made significant business decisions based on incorrect or outdated financial data. Let&#8217;s examine &hellip;<\/p>\n","protected":false},"author":6,"featured_media":6294,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false},"categories":[621],"tags":[106,623,117,105,107,108,98,96],"topic":[],"product":[79],"class_list":["post-6288","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-automation","tag-best-practice","tag-credit-card-reconciliation","tag-financial-transformation","tag-month-end-close","tag-standardization","tag-time-management","tag-visibility","target-user-controller","content-type-how-to-problem-solving","product-cadency"],"acf":[],"lang":"en","translations":{"en":6288,"fr":43338},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/posts\/6288","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\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/comments?post=6288"}],"version-history":[{"count":0,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/posts\/6288\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/media\/6294"}],"wp:attachment":[{"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/media?parent=6288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/categories?post=6288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/tags?post=6288"},{"taxonomy":"topic","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/topic?post=6288"},{"taxonomy":"product","embeddable":true,"href":"https:\/\/www.trintech.com\/wp-json\/wp\/v2\/product?post=6288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}