Is it finally time to upgrade your month-end reconciliation practices? If accuracy and efficiency are priorities for your finance team, the answer may be yes.
Month-end is dreadful for many finance teams. But while reconciliation is a must, leaders now have the tools and technology to determine what parts of the outdated, manual process stay — and which parts can go.
While changing the status quo takes a shift in mindset and a small investment, the payoff far exceeds the relatively small effort to introduce a completely new, automated process.
These five red flags are a clear sign it’s time to upgrade to a simpler, more efficient workflow:
1. Formatting and Formula Errors
Credit card reconciliation becomes a tedious process whenever it requires manual work. Entering missing information from source documents, categorizing every expense, and chasing receipts slow down the process. Smart systems like an end-to-end spend management system solve the problem by eliminating the need for manual data entry and matching card charges directly to an expense account.
Integrating payment platforms with the accounting system further streamlines the process and makes reconciliation faster. In fact, top performers in accounting orgs automate at least 87% of their journal entry line items.
2. An Account for Unreconciled Items
Reconciliation is critical to a company’s financial health and security. But many finance teams struggle with balancing speed and data accuracy at month-end. It is a major red flag any time that team members rely on recording unreconciled items in a temporary account to churn out reports.
Sometimes, credit card statements arrive late, expenses are still waiting for verification, or there are circumstances beyond anyone’s control.
Take the guesswork away and make sure your finance team has access to the information they need. Use a single platform to house all payment transactions and details. Not only will this cut downtime in reconciliation; it will also create a scalable solution for growing businesses.
3. Extended Reporting Cycles
At month-end, every company deals with management reports to assess performance during the previous period. Completing these reports hinges on a finance team’s ability to reconcile payments quickly.
The average company takes 6.4 days to produce management reports at the end of a period. If it takes more than a few days to churn out reports, your reconciliation process will absolutely benefit from process improvement and—more importantly—automation.
It is crucial to harness the power of technology and clarify roles and responsibilities in order to streamline the reconciliation process.
A system that enables your finance team to perform automatic matching between charges and expenses is the key to reducing the workload at the end of the month. When closing requires a shorter time span, your finance teams will have enough time to review reports for accuracy.
4. A High Volume of Requests and Follow-ups
Does your team get stuck waiting for emails that clarify expenses charged by another department? Chasing after receipts and supporting documentation is another common reason for delays in account reconciliation.
Companies with manual systems or legacy software often have an issue with compartmentalized data. Finance teams waste as many as 20 hours a month due to disparate, disorganized tools. Capturing all finance-related data in a centralized data storage helps put an end to endless follow-ups for missing receipts and expense reports at month-end.
When records are readily available in one place, finance teams can jump into evaluating data and make sure the information they have is accurate and reliable.
5. Lack of Full Visibility Over Spend
The clock starts ticking as each month draws to a close. That time crunch makes reconciliation more challenging. It’s impossible to complete the process quickly when finance teams are forced to process large volumes of financial data at month-end.
A system that allows teams to process expense transactions in real-time allows them to start reconciliation right away. By dividing the workload over the whole period rather than in bulk at month-end, teams can complete the reconciliation process faster and financial reports will be more accurate.
Leverage Technology for Faster Reconciliation
Don’t let manual and clumsy processes drag down your finance team. Speed up reconciliation by investing in smart systems. Instead of manually re-entering entries to a ledger, top-performing organizations have at least 55% of journal entries fed in from other systems.
Directly linking journal entries reduces processing costs by $0.45 for every $1,000. Automating journal entry line items eliminates double entry and most of the manual work.
Leveraging smart systems like TripActions LiquidTM that combine the power of virtual cards with an end-to-end spend management system empowers finance teams to do more in less time. With modern solutions that provide automatic matching, teams can close the books faster and turn in monthly reports in less time.
TripActions Liquid speeds up periodic report processing by providing a single platform to optimize spending and reconcile payments, making it possible to reduce reconciliation time from days to minutes. Schedule a demo today.