The account reconciliation process typically requires extensive, repetitive manual work, which can create bottlenecks throughout the broader record-to-report (R2R) process for many stakeholders. For big global companies, such manual processes often result in inconsistencies, as tasks are completed differently across various time zones by a combination of shared service and local finance teams.
Many companies see the benefits of using modern financial automation technology, but might not know how to get started. To help you out, we’re sharing our tips and best practices for how to transition from manual practices, using Excel and email, to automated account reconciliation.
The first step is to define a harmonised process. For example, if you use a common chart of accounts, you need the reconciliation process to be uniform and timely across all locations and ERP instances. You might set a goal for all companies to reconcile expense accounts by workday 10, revenue accounts by workday 12, and have all reconciliations approved by workday 15.
Agreeing on a harmonised process ensures consistency and shared timeliness globally. It also provides visibility into everyone's activities. With manual processes scattered across different SharePoint sites or Excel folders, headquarters can't effectively monitor progress. This situation often results in constant follow-ups and emails to check on the status of tasks.
A harmonised process allows for clear tracking and accountability, eliminating the chaos of localised, disparate methods. Only once you have this foundation can you take standardisation to the next level.
Once everyone is aligned with the process, the next step is to create standardised policies for account reconciliation. In Aico’s work with clients, for example, the team conducts a design workshop with the client’s finance team to plan out different reporting metrics and policies, such as how to group accounts.
For instance, you might group all payroll or VAT accounts together. Or you might create regional views, linking company codes across Europe to an EMEA region. This would allow you to report on the progress of EMEA as a whole or focus on specific sectors like manufacturing or finance.
You can also further harmonise evidence requirements and other accounting conventions across the group.
By measuring your account reconciliation performance, you naturally identify where issues arise. For example, you can track which reconciliations are consistently late or are rejected by the approver. This information allows you to pinpoint team members who struggle to find the records, data and journals they need, which indicates they may need additional training.
By identifying bottlenecks, you not only standardise the process but also enable continuous improvement. This often sparks internal discussions like:
Automating the process also allows you to quickly identify accounts with significant changes. For instance, if an account usually fluctuates within a 10% range but suddenly shifts by 50%, it flags a potential issue that requires investigation. Such insights are hard to spot manually, but automation makes them obvious with no extra effort.
Aico vs. SAP S/4HANA Account reconciliation functionality comparison guide
When you’re deciding what parts of the account reconciliation process to automate, look for the sweet spot between tasks that take the most time and are easiest to automate.
Common manual tasks that might be wasting your team's time include:
Time is of the essence in the financial close process. Switching between different applications and interfaces consumes unnecessary time and reduces your financial team’s efficiency. The process becomes even more complex if your closing task systems and account reconciliation aren't integrated in real-time. And the larger your system architecture, the more complicated things get.
By tying different financial close tasks together with live integration, you consolidate the whole process into one platform, managing everything from a single dashboard. No more waiting for data to update across the system, switching between countless windows and re-entering data across systems.
Live integration ensures that the finance team works with real-time data, providing accurate insights and enhancing decision-making.
Example of the account reconciliation dashboard in the Aico platform.
For example, after identifying an incorrect line during reconciliation, you can automatically create a journal entry. The updated figures will instantly reflect in the ERP system and refresh on your reconciliation screen in real time.
By defining a harmonised approach, creating consistent policies, identifying and addressing bottlenecks, focusing on quick wins and tying the financial close process together with live integration, you’ll make it easier for your entire financial team to reconcile accounts.
Making the most of automation not only saves time but also eliminates errors and provides better visibility and control, allowing your team to focus on more strategic tasks and drive continuous improvement across your company.
With Aico, even the most complex financial closes become seamless and stress-free. To learn more about automating your reconciliation process, download our free guide: Roadmap to Account Reconciliation Excellence.