Reconciliation in a World of Real-Time Transactions – take the pain out of financial year-end

Financial institutions in our capital market manage payments daily at an increasing rate. The immediacy of transactions needs ongoing real-time reconciliation solutions, especially with the demand and competition in this sector.

Before reconciled data existed, banks used the traditional method of end-of-day processing. The inevitable setback was the delay in addressing discrepancies, hence the automation of a reconciliation system to improve the efficiency of financial institutions.

Many institutions are stuck in the habit of leaving reconciliation to occur monthly, half-yearly and annually.  This then becomes a large project that demands many resources and head-aches, putting finance, operations and special projects teams under unnecessary pressure.

Benefits & Purpose of automated reconciliation

The reconciliation process ensures the accuracy, completeness, and validity of financial information. By doing daily reconciliations of assets and liabilities, when the previous day’s transactions and events are front of mind, there is no undue pain in any team and the reconciliation is investigated and completed immediately. This results in all internal and client facing data and reports being correct.

Another upside of a proper reconciliation process ensures that unauthorised changes have not occurred to transactions during processing.

Why does effective reconciliation matter?

Effective reconciliation bring with it a range of benefits, making the transition inevitable.

Herewith a few to consider:

  • It can alert you to any potential risks within the business, such as late payments.
  • Any unusual activity and exceptions can be identified quickly, including expected payments that haven’t been made.
  • Amounts that differ from the norm are picked up automatically.

On a large scale you will have no way of determining which expected payments haven’t been made or be able to detect fraud. Real-time reconciliation allows you to swiftly spot potential disruptions in your cash flow.

This is a great tool for picking up important trends that will help with future planning.  For example, unexpected late payments can be flagged and steps can be put in place to address it. This will also allow you to factor it into the accounting figures to give a more realistic forecast which reflects the cash flow.

With automatic reconciliation, businesses achieve more accurate cash flow visibility and enjoy improved transparency. It also assists with easy audit trials and write-offs.

Bracing yourself for the closing of the books is crushed, along with the old habits, when automated reconciliation is in place. Then, year-end is just another day at the office.