As many midsize and enterprise-level businesses continue to grow at a rapid pace, handling the financial close process can become a tremendous hassle.
Accountants typically perform these close tasks manually, using Excel spreadsheets and other systems not designed for the task, which can increase the likelihood of human error.
The close process has some major issues and can involve many late nights of reconciling, balancing, posting journal entries and researching discrepancies, which can eventually lead to unhealthy levels of stress for you and your accountants.
Isn’t it time for a change?
Financial Close software, like the platform offered by BlackLine, liberates accountants from those late nights by automating and improving the reconciliation process, making it more efficient and ensuring greater accuracy. Believe it or not, you and your accountants may even come to enjoy the financial close!
On your road to continuous improvement, here are a few ways your organization can improve the reconciliation process.
Automate the Workflow
The account reconciliation process involves multiple steps that require accountants to verify and certify various amounts of financial information. If done manually, the work hand-off between accountants can be laborious, inefficient, and potentially error-prone due to simple human errors.
However, accounting process automation, including automated workflows, keep the right accountants, reviewers, and approvers notified of the proper steps in the process. This typically includes submission confirmations, assignments, due date reminders, approvals, rejections, completions, and alerts.
But automation does more than just reduce manual effort, it also enables accountants to become exceptional by letting them focus on the work that fully utilizes their skill set and interests them the most.
Leverage the Cloud
Leveraging the cloud to optimize the reconciliation process is imperative. By utilizing a cloud feature, accountants have the ability to access data from any device with an internet connection.
This powerful feature allows you and your fellow accountants to have a clear and up-to-date overview of your current reconciliation status and overall close process — even if you’re away from the office.
However, not all cloud solutions are created equal. Since systems will contain financial data, you should ensure that any system you use is ISO 27001 and SSAE 16 Soc 1 Type II certified.
With such certifications in place, you can be confident that your data is secure, and is likely more secure than it would be using email, shared drives, or any other process.
Make Accounting Policies and Procedures Easily Accessible
Be sure that all accountants follow a standard set of policies and procedures during the reconciliation process.
To make policies more accessible to your accounting staff, consider implementing a web-based repository that is capable of linking policies and procedures directly to account reconciliations.
This will not only ensure that these policies and procedures are followed, but it will also make the review and audit of your account reconciliations much easier.
Avoid Manual Excel Spreadsheets
The key to ensuring the accuracy of your company’s financial statements is making sure that your general ledger account balances are correct. Most companies still manually reconcile their balance sheet accounts using Microsoft Excel, which has been an accepted method for many years.
This practice is fraught with risk that can potentially leave the closing process susceptible to human error. One small mistake, if not caught in time, may dramatically reduce the integrity of your financial statements and forecasts. Such mistakes are very hard to find since they are often caused by formulas or data entry issues.
In addition, since these spreadsheets aren’t linked to your general ledger system, any changes to account balances after the reconciliation is complete will likely make the reconciliation invalid.
In such a manual process, this is often not taken into account. Instead of relying on spreadsheets, consider adopting technology, especially technology with built-in controls, to prevent errors.
Use Standardized Templates
Using standardized templates for different types of reconciliations guarantees consistency, and makes it easier for others to review the reconciliations for completeness and accuracy.
Including checklists on these templates will further enhance standardization, completeness, and accuracy.
Although it may never be possible to completely eliminate human error, new advancements such as Continuous Accounting and technology like robotic process automation (RPA) significantly reduce the likelihood that an incorrect number will go undetected, or even be entered in the first place.
Check out one of our upcoming webinars to learn more about improving the reconciliation process through the power of automation.