Manual bank reconciliation is time-consuming and error-ridden - so what is the alternative? Automatic bank reconciliation could be the solution you were looking for!
Find out everything you need to know about in Futrli's guide to automated reconciliation tools.
Automatic reconciliation - definition
Account reconciliation is the process of making sure that your company's accounting records and your bank account data are in sync. This procedure, also known as automatic bank comparison, can be automated. This allows you to save time, money, and potentially costly errors caused by manual banking reconciliations. Automated account reconciliation can help reduce your organization's overall financial risk.
There have been discussions about whether automatic bank reconciliation is even feasible. Although many automated reconciliation programs claim to deliver “full automation,” a significant amount of manual input is still required. For example, your accounting program may not automatically connect with your company's bank account, meaning you have to download the bank statements and upload them yourself.
The perks of automatic bank reconciliation
Even if you can't fully automate the automatic reconciliation procedure (yet), it does have several major advantages over manual reconciliation. Let's look at some of the drawbacks of manual comparison. Bank comparison is time-consuming and inefficient, to say the least. It's a lengthy, costly process with a significant risk of mistakes. It often takes significant amounts of time to confirm what the accounting team already knows.
Automatic bank reconciliation can help you avoid errors in the reconciliation process and ensure that your process is accurate. It can also help prevent skilled accountants from having to spend too much time on an administrative task, allowing them to focus on more important matters. It's also worth noting that automated reconcilement software may handle far more transactions than humans, so you'll get consistent performance, regardless of the number of matching transactions that need to be checked.
Drawbacks of automatic reconciliation
There is a number of disadvantages to reconciling your bank transactions with account reconciliation software. Machines can still make mistakes - technical errors can occasionally pose an issue in automatic reconciliation. Unfortunately, there are many different elements of the automatic bank reconciliation process that can produce errors, which means it may take longer for you to complete the reconciliation. A common issue is a business working with a standardized pricing model - automated reconciliation software tends to have issues marrying multiple entries for the same day for several different invoices. If payments are for the same amount, the software may have difficulty allocating the individual payments on your bank statement to the customers they come from.
Automatic reconciliation - yes or no?
Despite the drawbacks set out above, automated reconciliation might be useful to your accounting staff in a variety of ways. If you can reduce the number of technical mistakes, automatic bank reconciliation may help you optimize your accounting procedures.