More companies around the globe are automating their financial reconciliation processes. Businesses can benefit in several ways, from enhanced transparency, faster month-end closures, higher precision, and so on, with automated financial reconciliation. Manual reconciliation is time-extensive and tedious. Thanks to specialized accounting software that speeds up the entire financial reconciliation process and offers multiple benefits.
What is automated financial reconciliation?
It is a process where two data sets are compared and evaluated for parity and disparity. An investigation is underway when anomalies are detected. Resolving strategies are considered before two records or data can be reconciled. Today, the manual reconciliation process is being substituted with automatic procedures for better and more efficient handling of month-end closures and other activities.
The incorporation of automatic reconciliation ensures that cash receipts and outgoings are assessed rapidly to match up with the bank records. Compared to manual spreadsheet checking, automatic reconciliation is lightning fast with checking cash flow, balance sheet, income statement, and other financial data. Reconciliation is executed every month, and some companies even reconcile every day. When financial reconciliation is done frequently, automated software makes it easier to detect inconsistencies.
Automatic financial reconciliation indicates there are no mistakes that manual reconciliation includes. Assessing anomalies through multiple financial data spreadsheets, paper-based documents, and records is physically exhausting and tedious. It is common to miss out on a figure or even misread data. Manual reconciliation is vulnerable to human errors and includes additional work to resolve the mistakes. Automatic recognition of discrepancies and errors is missing in the manual reconciliation process. Thanks to automation, the specific algorithm delivers accuracy and quickly detects anomalies. Thus, rectification is faster and more efficient without affecting business productivity.
Elimination of frauds
Since automated financial reconciliation is faster and more accurate, it protects against fraudulent entries. Any discrepancies and irregularities in data can be picked up swiftly and investigated without delay. This indicates that if there is even a one percent chance of any fraudulent activity is taking place, it can be handled quickly without damaging the company’s reputation. Staining the reputation means the company has to bear losses.
When there is a reconciliation procedure taking place and it is automated, there is no hidden agenda, and everyone is on the same level. Everyone in the company can view the procedure and participate in the month-end closures. Employees don’t have to make individual calls or attend separate meetings to discover the activities and what should or shouldn’t be included. There is better transparency in business operations, which is particularly vital for businesses with several global entities.
Businesses ensure that their financial records and data are consistent and accurate. Thus, they give importance to the robustness of automated financial reconciliation. Modern software controls financial streamlining, and accounting, and delivers valuable insights into business data. Furthermore, automated financial reconciliation simplifies the overall closure process.