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How to Stop Chasing Paper When Reconciling Accounts

There are so many moving parts that make up an account reconciliation. Reconciliations may require everything from board meeting minutes discussing a bonus check for a sales person, to a bank statement recording checks, to a lease agreement, to an insurance policy’s monthly payment plan.

On top of this, the General Ledger balance will likely change in the three-day close window, a customer may decide to pay a four-month old invoice and a colleague in marketing may finally choose to remember to get that new vendor’s long overdue invoice to accounts payable.

A Robert Half and Financial Executive’s Research Foundation report revealed that over 59% of U.S. executives said their accounts are manually reconciled. Thirty eight percent of US companies surveyed have over 500 accounts and nine percent have over 3,000.

If you take a loose calculation, a company with 500 accounts would have about 1,500 documents floating around its account reconciliation process that need to be handled, yes, by hand. Each account needs a coversheet, a general ledger print out and possibly a supporting document.

If you take a company with 3,000 accounts, you’re looking at about 9,000 pieces of paper. That’s 18 reams of paper – for JUST ONE MONTH of account reconciliations.

Let’s not forget that these 1,500+ documents are not all tidy and arranged in one neat stack. They are likely not even in the same department. Or worse yet, they may have to be created as in the case of an amortization.

No wonder account reconciliations are often considered a “daunting task”.

Many companies manually reconciling accounts use a color coded binder system to house their documents (Ever had to wait your turn to use the binder?). Other companies may scan everything and store the scanned documents on a shared drive. Finally, others may automate their account reconciliation process.

Stock Yards Bank and Trust chose the latter method and automated their processes with SkyStem’s ART. ART is a SaaS based account reconciliation and month-end close automation tool. As such, it is connected to the ERP, or accounting system, to obtain an updated general ledger balance on demand.

ART used the account data fed to it during the bank’s two- week implementation to automate coversheet creation for each account.

Although supporting documents had to be uploaded at the beginning, they now carry over to the subsequent month’s reconciliation, eliminating the need to hunt them down and scan them again. The bank now has a central repository for housing account a library for the month end close and account reconciliation documentsreconciliations and financial-close documents. By providing auditors with limited access to ART, the bank’s finance team no longer has to chase down information rich documents for their auditors.

The bank soon found that although they were now confidently reconciling 100% of their accounts, they were actually handling fewer of them as they set ART up to auto-reconcile, or system-reconcile. In fact, 35% of their low risk accounts are system reconciled, such as prepays and zero balance accounts. The bank used ART to take these types of accounts from a 100% manual paper system to zero paper automated system.

Stock Yards Bank and Trust was also able to eliminate the need to print account reconciliations as a means of capturing the reviewer’s signature. ART now automatically sends an email alert to reviewers once a preparer marks the status as complete on an account reconciliation. Upon completing the review, a signature is required before it is considered approved. The date stamp is automatic.
By automating their account reconciliation and month-end close processes, Stock Yards Bank and Trust has been able to eliminate a major portion of the manual processes requiring paper.

You can read the full case study here.

By |2023-08-07T16:00:49+00:00April 22nd, 2015|Blog|0 Comments
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