By Scott Costello, Principal Partner, ProCore
Account reconciliation as part of your monthly, quarterly, and annual close can be tedious, time consuming, and even confusing. Using solutions like spreadsheets can add even more problems with security, auditability, and simple mistakes.
Technology can eliminate these problems, but the right processes must be in place. There are three goals that organizations should strive for to simplify and modernize their account reconciliations process: automated, accurate and actionable.
Account reconciliation using spreadsheets involves the same process every month: download or export a trial balance from the general ledger, then copy that trial balance into a workbook for references. This is a manual process, and when new accounts are added, users must manually insert these new accounts into the workbooks. If there are last-minute postings, the process must happen all over again. Oracle Cloud EPM Account Reconciliation has direct integration into general ledgers, so that when the data changes or new accounts are added, they can be fed automatically into the tool.
Account reconciliations tools should also eliminate the need to reconcile data that is off by a marginal amount. Spending time researching and reconciling accounts that are off by a few dollars is not time well spent. Oracle’s solution lets you set rules to automatically reconcile data for specific accounts, or when the difference between the two sources is too small to impact the business. These rules can be copied for future periods, and notifications can be sent informing appropriate parties of the thresholds used.
As each account is reviewed, it’s important to know what the account is used for—and to know which source to tie it out against—to accurately reconcile. Accurate reconciliations can help you find problems quickly. The process of reconciling cash accounts accurately can even help you detect fraud.
The best way to be as accurate as possible is to match each transaction from the source to the general ledger. For some organizations, this can mean hundreds or thousands of transactions a month for just one account. With modern technology, you can let the tools do the work. The right tools can comb through all source and target transactions, match consistent data, and pinpoint transactions that don’t have a match. This can save hours of work and assure more accurate reconciliations.
The transaction matching capabilities in Oracle Account Reconciliations can match every AP transaction in the general ledger to every invoice in accounts payable.
One of the biggest challenges with account reconciliations in spreadsheets is that each user might run the process slightly differently. Without a standardized process, it can be difficult to yield consistent and reliable results.
Oracle Cloud EPM helps ensure that standardized processes are clearly defined for each account or group of accounts. When everyone knows the right steps to follow for each account, the reconciliation process becomes much easier, and you can track status to see the progress of your close.
The compliance dashboard in Oracle Account Reconciliations displays the status of each user’s stage in the process.
Once a company-wide process is defined, other actions can be simplified. For example, you can identify accounts with the highest risk of error, or accounts that must follow specific statutory requirements. As actions are completed, Oracle Account Reconciliation can provide insights to monitor those actions, find bottlenecks, and speed up the overall process.
As with any technology, standardizing internal processes can save time and money. Having the right technology can speed up reconciliations while ensuring consistency. An automated solution will drive accuracy, making it simpler to identify the accounts that need action.