Every ERP and finance management system (FMS) available on the market today can spit out a trial balance at the drop of a hat. That is a core deliverable of any accounting system and it comes as no surprise that they all do it.

But there is a surprising gap that virtually every ERP and accounting system has missed. The automated reconciliation and substantiation of those accounts in the balance sheet. Are the values what they should be? Are the accrual accounts balanced off? Are those zero-accounts zero? Has the prepayments schedule been correctly applied? Have the static accounts remained so? How many hundreds of thousands of accountants settle in for late evenings at the end of the month, with their trusty old friend the VLOOKUP spreadsheet, to reconcile all the accounts and verify their status for the financial reports? This is a Groundhog Day of global proportions.

It is staggering how this process has been neglected by most if not all of the ERP and FMS vendors but it’s fair to say that from MYOB to SAP, and most in between, there is no automated reconciliation function to support the fast close. Yet it is a key step in the compliance cycle for every company and the final mile of accounting to affirm the books are an accurate representation of the financial position.

By automating balance sheet account reconciliations within a system, you gain real and tangible benefits including:

Productivity and efficiency. By releasing the predictable accounts for automated reconciliation the system will reliably and consistently apply the rules you define against each account. Only those accounts whose balances either breach their rule or are complex by nature will need to be allocated to people for manual reconciliation. This frees up a lot of time currently spent on repetitive manual effort and allows people to work on more valued activities.

Visibility of the close process. Even those accounts that need manual reconciliation are processed within the reconciliation system. Differences are identified and explained, supporting documents attached, balancing journals created and recorded and then of course reviewed and approved through workflow. The Financial Reporting Manager has full dashboard visibility of the status of all accounts and the progress of the team closing off the books.

Centralised control. When the finance team is spread across a number of locations it can be challenging to get a coherent and timely position on the close cycle. Even when people are close to hand it is not always easy to keep track of where things are up to. An automated reconciliation system gives you up-to-the-minute status of what is happening, automated alerts if accounts are not getting closed off and fingertip controls to reallocate tasks and accounts across the team to overcome any bottlenecks or delays.

Accelerated close. If business rules can be applied to many of the predictable accounts, then automation can close them within the rules early in the month and just track for changes. If a change does occur that breaks the reconciliation rule then the account will be automatically reopened and allocated to a team member for analysis and resolution.

Smoother audits. Both internal and external auditors will be delighted to see the removal of spreadsheets, and in a system with an automated workflow process they typically have fewer queries to make that require interrupting your team’s daily rhythms. With external workflow, a full spectrum automated reconciliation system can even manage those requests through approved resolution as well.

 

This surprising gap in the period close and financial reporting process is very effectively and affordably filled by BlackLine Systems. If your periodic account reconciliations are buried in spreadsheets and you would like to see a better way of doing things, why not call us for a chat?

 

You can read more about Professional Advantage and BlackLine here.
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