Advice and Information for Finance Professionals

3 Ways to Streamline Account Reconciliation

Nigel Youell
Senior Director

Account reconciliation is like the common cold. Here it comes around again, you know you’re going to be miserable, but there’s not much you can do about that.

I’ve been there, so I feel your pain. Reconciliation is just one part of the monthly financial close, and often overlooked for process improvement that would make the close faster, easier and more secure.

Yet because reconciliations are often manual, involve hundreds of people, and can require tens of thousands of reconciliations for large organizations, the opportunity to shrink time and resource requirements can be huge.

The reality is that for a relatively small investment, you can dramatically streamline reconciliation and decrease associated risk. Amazon, for example, reduced the process from about five days to one with 80% of reconciliations in fixed assets closing automatically with no manual intervention.

We’ve drawn on Oracle’s 35 years of building and implementing financial management technology to now offer reconciliation automation solutions for both on-premises or cloud delivery. For both, we’ve incorporated three key principles to streamline the process:

No. 1: Automation

Automation fully integrates account reconciliation into the financial close and supports monitoring, reporting and analysis. All of these duties move from disparate and dispersed spreadsheets into a single secure platform. In fact, recent research shows that reducing the use of spreadsheets can shorten the close by 32 percent.

Through user-defined, rules-based thresholds, the system automatically sorts the data into material and immaterial inconsistencies, and then reconciles immaterial entries without human intervention. This significantly reduces the number of accounts to reconcile without compromising accuracy or increasing risk.

The finance team can actually win back several days a month to devote to value-adding work. Imagine the new capacity a large company with multiple subsidiaries could gain—all without disruption or added risk.

No. 2: Efficient Process Management

One of the reasons the traditional method is highly inefficient is that it lacks visibility into data flows. Insufficient justification and documentation prompts phone calls, emails and other types of hunting and gathering because it’s impossible to see where the missing information resides.

A modern automation solution unmasks data so there’s instant visibility into the progress and status of the reconciliation lifecycle. Whereas it used to take days to gather information and prepare status reports on reconciliations, an automated solution can reduce this to hours. And when data is missing or incorrect, the problem is solved much faster with real-time collaboration rather than offline outreach.

Users also can access analytics that show process trends so that they can continue to monitor and improve the efficiency of the reconciliation process.

No. 3: Connection to Other Systems

Organizations could be overlooking the availability of modern tools for reconciliation because they’ve invested heavily in existing IT and have no appetite for managing add-on implementations.

Oracle Account Reconciliation Cloud Service and the on-premises solution Oracle Hyperion Account Reconciliation Management have business user-driven data integration capabilities, so you can be assured all accounts and transactions are included. You can easily link to multiple systems, including Oracle or third-party ERP systems.

The solutions are highly configurable and don't require a lengthy or complex implementation project.

Improving Security of Financial Data

In addition to streamlining the process, an automated solution for reconciliation also improves security of your financial data. Think about it: How secure are the thousands of spreadsheets that live within a financial department's boundaries? Without a single point of consolidated control, one could say that security is lacking. First, every time someone has to touch the data there's a risk of error. Second, you can't be sure that unauthorized individuals don't get access to the dispersed data.

But the instant a modern, automated system starts working, the sensitive data within the reconciliation process is more secure — both because of inherent system security and because access can be restricted to authorized users.

Faster, Easier Reconciliations Are Possible

Improving the efficiency of reconciliation might not be at the top of your organization's finance wish list, but it should be. The potential to reduce manual work, speed up the process and improve security is big while the required investment per user is small.

Automation, process control and connectivity to other systems are critical to truly streamline the resource-draining effort of reconciling accounts. It's a quick win with a big pay off, and your stressed-out financial team will be forever grateful.

For more in-depth advice on how to speed up account reconciliations, I invite you to download the Ventana Research paper, “Achieving a Shorter Close.”

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Comments ( 1 )
  • Teresa Eng Tuesday, September 4, 2018
    Yes! Spot on! I would put them in the following order:
    1. System Integration (Connections to other systems)
    2. Process Improvement (documentation, training and revamping)
    3. Automation (Robotic Process Automation)
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