Can you trust your numbers? Do you feel confident that the results of your month-end close can guide your decision-making process going forward?
Account reconciliation is a crucial step for ensuring financial integrity. However, if there’s even a single mistake in the account reconciliation process, it renders downstream processes– like financial statements and management reports – unreliable. Moreover, in today’s hyper-strict regulatory environment, there’s a good chance you’ll have to disclose and possibly issue entirely new statements. By improving the account reconciliation process, you can avoid those problems.
Tips to Improve Account Reconciliation
Improving account reconciliation comes down to following a set of best practices. These will help your financial close go more smoothly, you’ll have more reliable numbers and you can make better decisions.
For starters, you must develop a company-wide reconciliation policy. Everyone needs to understand how crucial it is that your accounts are reconciled properly. Putting the policy in place isn’t enough, though. You need to educate employees on the importance of account reconciliation as well as how to carry it out.
Second, you need to ensure that the balances being reconciled are the most up to date. One way to do that is to integrate your ERP with a financial reporting solution. Without integration, the data you extract from your ERP system is exported to a static document that can no longer be refreshed (making the information stale the moment it leaves your source of record).
Why ERP Integration is Key
There’s another reason that ERP integration is such a good idea: it keeps you in compliance with regulations. With ERP integration, there is a lower risk of errors because there’s no manual data entry that can lead to mistakes, disclosures and restatements.
ERP integration also saves you time. It breaks down data silos across your company, putting all of the information you need in one place. Instead of wasting time hunting for data from other areas, it’s available at the click of a button.
While we’re on the topic of saving time, we’ll discuss a third best practice: completing and reviewing your account reconciliation in a timely manner. ERP integration helps you achieve this goal, too. Because you’re automating data collection, account reconciliation no longer has to take weeks or months – you can complete the month-end close or even the year-end close in a shorter period of time without feeling like you’re up against it.
A final best practice is to constantly improve the account reconciliation process. At many firms, account reconciliation is a stressful, time-consuming process where poor visibility can lead to errors and oversights. Every month, quarter and year, you need to find ways to make the account reconciliation process go more smoothly, produce more reliable results and take less time.
Account reconciliation is one of the foundations of financial integrity. ERP integration helps you achieve it.