Streamlining financial accuracy: The strategic edge of automated account reconciliation

In finance, the precision of and trust in your financial data is paramount. As businesses transact globally, the critical role of account reconciliation software and automation comes into sharper focus. Newer reconciliation solutions can now let you elevate the close process with a high degree of automation around the account reconciliation process, ensuring an accurate and efficient financial close process that aligns with the strategic goals of CFOs and their accounting teams.

The problem with manual account reconciliation 

Your finance team spends a huge amount of time and effort manually checking, validating and comparing transactions and balances from one month to the next as part of the financial close process. Time is spent looking for evidence of missing transactions, such as accruals, or errors caused by, for example, postings to the wrong general ledger account. Account balances are substantiated to ensure that assets and liabilities are accurately recorded and reported in the balance sheet, as part of a team effort to build trust in the numbers and ensure reliability in the financial statements.

The absence of automated account reconciliation software, often means the printing of reports or downloading large volumes of transaction data to spreadsheets and then manually reconciling and verifying. Due to the sheer volume of manual effort involved, reconciliations are sometimes only performed quarterly, leaving the financial statements vulnerable to being published with undetected errors. Less frequent manual reconciliations result in errors going undetected for weeks or months after the event, making error investigation and correction an even longer and more arduous process.

The path to a streamlined close process

Account reconciliation software redefines the financial close process by incorporating end-to-end automated transaction matching, validation and balance sheet certification capabilities for a faster and seamless close. Time-consuming and complex accounting processes are simplified by the introduction of automated reconciliations into the month-end close workflows. Discrepancies, anomalies and errors are identified and corrected, supported by comprehensive and clear audit trails, with enhanced internal controls. 

This enhancement to the financial close process is not just incremental; it’s transformative, eliminating the need for data duplication in spreadsheets, offline storage of sensitive data and large numbers of staff dedicated to manual tasks, which facilitates a faster month-end close with improved accuracy and compliance across the entire reconciliation process.

The automation inherent within account reconciliation software enables rigorous transaction and balance checks to be performed more frequently, including daily or weekly reconciliations, balance validation checks and exception analysis. This ensures errors and omissions are detected and corrected early rather than being delayed until month or quarter-end when finance staff are already under heavy time pressures.

Dashboard view for clear decision-making

A key feature of account reconciliation software is dashboards which offer a lucid real-time snapshot of financial health, eliminating the need to manually record status updates. They enable accounting teams to oversee the status of the entire reconciliation process, offering views of the balance sheet, bank statements, cash flow, and general ledger accounts with a clarity that supports operational and strategic decisions with both timely and reliable financial analysis.

Bank reconciliation, balance sheet reconciliation and beyond

Automating traditionally arduous tasks such as bank reconciliation and balance sheet reconciliation, account reconciliation software automatically and meticulously compares transactions and account balances with bank statements, whilst validating transactions and balances based on user-defined rules, which ensures the reliability of the financial records. Adjustment entries to correct errors can be automatically identified and posted to the general ledger, including reconciling items such as interest and charges and the reclassification of assets and liabilities on the balance sheet, tasks which typically require the processing of manual journal entries each period end. This process underpins the trust that stakeholders place in a company’s financial records by ensuring completeness, accuracy and validity— a trust that is fortified by the software’s rule-driven approach and precision.

Financial leadership in the cloud

Today’s CFO requires tools that are not only scalable but also flexible enough to adapt to the rapid changes in the financial landscape. Cloud-based account reconciliation software meets these demands, offering a scalable, reliable solution that supports accounting processes and financial reporting from anywhere, at any time. This is a leap forward, a shift from highly labor-intensive Excel-laden processes to smart, automated, cloud-operated financial management.

Templates, documentation and compliance

With customizable templates, configurable rules, and easy access to supporting documentation, accounting teams can close faster with minimal manual effort, aligning with rigorous internal controls and satisfying audit requirements. The software ensures that every financial statement is subject to the rigor of digital interrogation and backed by verifiable data, providing a solid foundation for auditors and stakeholders alike.

Integrating with the ERP ecosystem

No financial tool should stand alone, and account reconciliation software is designed to integrate with existing ERP systems. This synergy allows for an uninterrupted flow of data, ensuring that every financial action—from transaction matching to journal entry—is reflected across the company’s financial ecosystem in real time. When vetting any finance automation solution be sure to inquire about integration with your ERP system. Look for pre-built connectors to guarantee truly seamless integration and full platform capabilities.

Embracing a future-ready financial tool

As businesses look to the future, the adoption of a robust reconciliation tool represents a stride toward financial process optimization. Companies leveraging this technology are setting themselves apart, ready to navigate the intricacies of financial management with a proactive, data-driven approach.

In conclusion, account reconciliation software emerges not just as a tool for efficiency and a faster close but as a strategic ally. By enabling a real-time, accurate view of the financial status, it allows businesses to stride confidently into the future, assured that their financial processes are as rigorous as they are innovative.

Sign up here for a demo of Redwood’s automation of account reconciliation and record-to-report solutions.