When your company receives audits, it is essential that you have previously carried out an exhaustive control of the management. The reconciliations will allow you to prepare the Accounting Reconciliation Document. Your account balance should adjust to the reality of your bank account and thus avoid losing control over your cash flow.
There are two ways to deal with this process in your Accounting department: you can do it manually, or streamline the process thanks to accounting automation or RPA. We will explain both ways and you will know, without hesitation, which one is the best at the end of this article.
Manual Reconciliations, how are they done?
The most common way to do a bank reconciliation is manual, using tools such as Excel.
- You need to download the bank statements of all your accounts. In the case of a company that has several accounts, you must make sure that you have the statements of all of them.
- You must also take into account cash. If you have physical establishments and you usually receive payments in cash or checks, it is very important that you do not forget those inflows.
- The right thing to do is to reconcile regularly. The higher the volume of invoices, the faster you should do it to prevent work from piling up.
- You should also have the bank reconciliation document from the previous period at your disposal, since that will be the balance from which we will record the new collections and payments.
- The next step is to compare your ledgers with the bank balance you have.
- You must add deposits and checks that are in transit. That is, they have not yet arrived at the bank, but you already know that the client made the transfer, or that you have already deposited the check to the provider.
- Check all the mismatches: duplicated accounting entries, invoices that are not in your books, checks that have not been cashed yet…
- Add balances that were not included in your ledgers, such as interest income or bank service charges that you requested.
With this you will have made the balance adjustment, so your data should already add up.
This huge task can take several days of work for your Accounting Department. The more bank movements and more accounting data, the greater the work. And also mistakes occur, because humans make mistakes, and sometimes we put a period or a comma where it does not correspond.
Most companies follow this model but are not aware that they are making their employees work in unproductive tasks, which do not generate profits, quite the opposite. Every year, it is an opportunity cost translated in hundreds or thousands of dollars, depending on the size of your company.
Automated Reconciliation: an RPA solution
Now, imagine that this whole process takes you days of work, and that you have to do repeatedly every month, you could do it in a matter of minutes.
This is possible thanks to an RPA (Robotic Process Automation), a solution that will allow you to do all this process in an automated way.
You don’t have to assign one person to do all this work. Conciliac’s RPA does it for you. What do you get?
- Your employees will be able to dedicate their time to productive tasks and not get lost in mathematical calculations.
- You will stop making mistakes in tax settlements due to manual calculation and therefore, your accounts will be more transparent.
- You will reduce the risk of fines or penalties for inspections and audits. In other words: you will save money and avoid trouble.
- You will be able to make better decisions by being able to clearly know your real balances and keep the accounting up to date.
- Your treasury management will improve, by being able to automatically detect payments and collections that were not made.
- In addition, your reconciliations will be made more frequently, so you can prevent mismatches from lingering over time, which will help you optimize decision-making.
If you want your Business to be able to achieve all these benefits, the solution is here. Maintaining the problem will make everything much more complicated and sooner or later you may regret ignoring it. Request our advice now and solve an issue which perhaps you have been involved in for years…