How to Spend Less Time on the Account Reconciliation Process
It’s interesting that companies that get all of their account reconciliations completed during the close period are as prone to red flags as companies that have trouble getting all of their accounts reconciled before the next close period opens.
When all accounts are said to be reconciled within the five-day close period, many knowledgeable of the financial process, whether auditors or Financial Controllers or CFOs, expect that company to have a fully-integrated system in place, or perhaps to have an account reconciliation automation solution in place. More often though, most suspect that that company’s accounting team may be rolling forward a few account balances and possibly skipping the reconciliation of a handful of predictable, low activity, zero balance accounts rather than reconciling all of their accounts.
Companies struggling with their account reconciliation process have trouble getting to all of their accounts that need to be reconciled within a timely manner. They end up reconciling only key accounts and accounts that may be material within the first days of the financial close. These accounts are often complex and take a lot of time to reconcile, leaving them with little time to reconcile other accounts that may be more than inconsequential but less than material.
Companies reconciling accounts beyond a two-weak time frame are often suspect of red flags, in particular when they need to make post-close adjustments. PWC, in its How to achieve more timely, accurate and transparent reporting through a smarter close report, takes the perspective that “the books are not closed until the numbers stop moving.”
PWC goes on to say that companies with efficient and controlled close processes maintain their focus on accuracy, gaining speed via the elimination of manual processes and bottlenecks. They suggest leveraging technology by using existing systems where possible, plugging holes as needed, and avoiding an expensive overlap of capabilities in all cases.
One Bank’s Pursuit of a Paperless, Time-Saving Account Reconciliation Automation Solution
Gateway Bank of Southwest Florida was able to cut their account reconciliation process time in half by tying their standing Fiserv ERP to SkyStem’s account reconciliation automation tool, ART.
Prior to implementing ART, the bank was struggling to complete all of their reconciliations before each month’s end. Additionally, the auditors were commenting that, not only did 100% of their accounts need to be reconciled, they needed to be reconciled in a timely manner as well.
Using ART to system reconcile, or auto reconcile, up to 35% of their low risk, zero balance accounts took a lot off of the Senior Accountant’s plate. In step with PWC’s advice in attaining a smarter close, the bank also eliminated a number of manual processes that were taking place in off-line spreadsheets. The Senior Accountant wanted to go paperless and was able to do so with ART.
Another step the bank took to cut its account reconciliation process time in half came through the establishment of a workflow and central repository via ART. ART’s workflow reduces the review time as sign-offs and dates are now automated. Supporting documents residing in the repository on ART carry forward as needed, eliminating the need to recreate or find them.
You can read more about Gateway Bank of Southwest Florida’s success in improving its account reconciliation process via the case study.