August 24, 2021

Moving to Account Reconciliation Automation

5-minute read

What Is Account Reconciliation Automation?

Account reconciliation automation brings the reconciliation process into the digital age. By migrating your manual, spreadsheet-dependent process to a cloud solution, your company will have a standardized method to verify the accuracy and appropriateness of its balance sheet accounts.

Automation assigns many of the more basic/manual elements of reconciliations to software. This reduces effort and eliminates much of the human error inherent in traditional reconciliations. It also creates a more reliable and dependable process and frees up your team to perform higher-level tasks.

Focus Areas for Account Reconciliations Automation

Traditional reconciliations place a number of burdens on your accounting staff, like compiling data and ticking and tying. Automation takes care of all these tasks and more, so your team can focus on other aspects of the process.

Automated account reconciliations move these tedious and time-consuming, manual “touchpoints” in the reconciliation process to a cloud-based system, saving your teams time and improving accuracy.

Source Systems Connection

When you adopt a cloud-based platform to automate your account reconciliation process, you want software that can seamlessly connect with and extract data from your source systems and match transactions across multiple platforms.

Automatic Flagging

Utilizing standardized templates, defined workflows, and rules-based procedures, your software will automate the process of flagging errors and exceptions that require manual intervention. This allows your personnel to focus on reconciling the issues instead of going through the time-consuming, manual process of finding them.

Automated Workflows

By automating workflows, your reconciliation platform will ensure that the right tasks are being assigned to, performed by, and reviewed by the right personnel, saving time, eliminating oversight, creating segregation of duties and streamlining the process.

How Account Reconciliation Automation Can Help

Migrating to the cloud will allow your business to automate all the demanding tasks that make up the larger account reconciliation process. Reconciliations are multi-faceted, and the level of complexity grows with the size and complexity of your business.

Complex issues arising from the various aspects of your business—like the statements you receive from your bank, international transactions, and the form of payment your receive from customers—can add layers to the reconciliation process. Automation enables your organization to standardize and simplify the issues that are complicating the reconciliation process and slowing down your team.

Bank Reconciliation

Reconciling bank accounts may seem like a simple task, but the process can be more complicated than meets the eye. For example, the timing of bank statements may not coincide with your business’ calendar for closing its books. 

Your business may have accounts at multiple banks or have a large volume of transactions to reconcile. And while we like to think that banks are reliable and efficient, with heavy reliance on their own automation, the reality is that banks sometimes make mistakes, too.

Reconciling accounts set up to handle foreign currency must also factor in the unique aspect of exchange rates against the dollar. Automation can standardize the process and reduce the human error that may occur.

Direct Payments

In the digital age, many payments are made directly online via ACH or other forms of automated payments. Often, these payments are not accompanied by an invoice or other details about the payee. 

Automation can help reconcile direct payments made by customers to the business, or from the business to a vendor, when the source or purpose of the payment may not be entirely clear. Automation captures these payments and uses AI to assign them to the correct customer and account.

Balance Sheet Substantiations

Software solutions enable your business to move away from the manual, spreadsheet-dependent process of substantiating its balance sheet. Automation streamlines and standardizes the process, reducing errors and risk.

Intercompany Accounts

Purpose-built accounting software can help your business address challenges associated with intercompany accounting by standardizing and implementing a rules-based approach that minimizes the incidence of human error.

External Suppliers

Automation can also simplify the process of reconciling statements from suppliers and vendors with your own journal entries. Software platforms can recognize and process statements from multiple vendors using different formats, eliminating errors and delays in the manual process.

How You Can Improve Account Reconciliations with BlackLine

BlackLine Account Reconciliations automates and standardizes the reconciliation process, and natively integrates with other BlackLine solutions to help manage every element of the financial close. Streamlining account reconciliations helps ensure accurate and efficient accounting activities, free from manual, error-prone practices.

BlackLine is a leader in Enhanced Finance Controls and Automation software, and the only provider that offers a unified cloud platform supporting the entire close-to-disclose process. BlackLine enables F&A teams to move away from out-of-date practices and work smarter, more efficiently, and accurately.

Read this guide next to discover how to build a compelling, fact-based business case for implementing a finance transformation platform in your organization.

Michael Shultz

Modern Accounting