What are Bank Reconciliations?
Bank reconciliations are the process of verifying the integrity of data between bank records and a company’s internal financial records. Bank reconciliation begins with the comparison of balances between bank statements and the associated transactions within various accounts in a company’s chart of accounts. This is a necessary step to ensure that bank account balances are correct and accurate. When discrepancies are found, they are investigated by accountants and corrective action is taken.
What is the Process for Bank Reconciliations?
This bank reconciliation process is carried out when bank statements are received or after the close of a financial period. Accountants go through each bank statement or file and match transactions to transactions with the company’s internal systems. When discrepancies are found, investigation is performed to determine the appropriate corrective action.
Corrective action may involve disputing transactions with the bank, making journal entries to correct timing items/errors, or other actions to address account balance differences. All research performed, information found, and actions taken are stored for audit purposes. The bank reconciliation process must be completed before a company can certify the integrity of its financial information.
How Does Bank Reconciliation Software Work?
Bank reconciliation software automates all steps in the bank reconciliation process. It imports data from both ERP or general ledger systems and bank files or statements. It then compares account balances and transactions details between these sources, and identifies any discrepancies so that they can be investigated by accounting staff. This removes the burden of manually matching transactions that is placed on accounting staff, and frees accountants to focus on analysis of discrepancies. Features include:
- Automated account balance and transaction detail comparison
- Review and approval workflows, with proper segregation of duties
- Templates and checklists to standardize reconciliation processes
- Integrated storage of any supporting documentation
- Link to applicable policies and procedures for easy reference
What Solutions Does BlackLine Offer for Bank Reconciliations?
BlackLine offers a Transaction Matching product that will import data from almost any source. This includes all major ERP systems as well as bank files and statements. It is specifically designed to handle high-volume reconciliation and can rapidly match millions of transactions. It also contains configurable matching rules, to handle the most complex matching scenarios.
When discrepancies are identified that require analysis and reconciliation, this product integrates with the BlackLine Account Reconciliations product, available together with Transaction Matching. Account Reconciliations provides automated workflows to route reconciliations to the appropriate account owner, and centralized dashboards for full visibility into the status of the reconciliation. Also included are customizable templates, checklists, and integrated storage for supporting documentation, to ensure that reconciliation processes are standardized across your organization.
When correcting journal entries are required, the BlackLine Journal Entry product automates this portion of the process as well, and is also available together with the products mentioned above.
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