“CFOs need to be able to reconcile data faster, to produce monthly, quarterly or annual reports with confidence that the data is correct, to reduce write-offs and potential fraud, to ensure timeous financial closures, while at the same time continuously innovating and creating efficiencies that help ensure their team’s success.”
So says Darren Turnbull, Chief Executive Officer of financial services solutions specialist MoData.
In increasingly complex environments, manual financial reconciliations have become more time-consuming and labour-intensive. Machine learning-enabled automated account reconciliation overcomes these challenges, saving CFOs time, increasing efficiency and improving accuracy for faster reporting.
Turnbull says: “Many mid- to large-sized enterprises still depend on spreadsheets, and have to manually export data from one system to another and reconcile it all for reporting purposes. A retailer, for example, might have a range of financial services - each running off a separate system and not integrated into the main accounting system. Large enterprises might reconcile data across hundreds of systems. Reconciling data from across these systems is extremely time-consuming, inefficient and prone to error or even fraud.”
In the traditional reconciliation environment using simple toolsets, manual processes via Excel, or simple home-built file-to-file matching solutions, CFOs face challenges such as the timeliness of data, backlogs of unresolved unmatched items and untraceable transactions, and under-utilised existing reconciliations systems, leading to write-offs, and accountability on resolving or tracing discrepancies, Turnbull says.
"The quality of data input into the reconciliation process, especially from external sources, can impact reporting. Having to manually process and enrich data before feeding it into the reconciliation process can result in unmotivated or overworked reconciliation staff."
Reconciliation is crucial to ensure the accuracy of financial data, the traceability of assets and liabilities across business process and organisation boundaries, and auditability, Turnbull notes.
Because the account reconciliation process is a critical first step in the financial close and sets the foundation for period end success, reconciliations can be an extremely stressful process that results in using more resources than planned for completion, he says.
Advanced automated reconciliation solutions offer standardised data matching, reconciliation and exception management across multiple systems, transaction types and data formats. Bringing all transaction-level and balance-level data together from disparate systems into an automated reconciliation platform, significantly reduces the risk of errors and dramatically improves efficiency, Turnbull says.
“Automated tools transform the reconciliation process, with automated data extract, validation, enrichment, transformation and loading, with rules-based matching, financial close and approvals processes, flexible reporting, processing failure notifications and resolution processes. Modern reconciliation systems can cater for many-to-many matching, where many sources of transaction data can be included in reconciling a transaction,” he says.
Modern automated reconciliation systems allow organisations to assign permissions for various functions, enable alerts and notifications, and ensure that supporting documentation and approval processes create an auditable record of a financial period, with the assurance that all personal and sensitive data is processed in compliance with rules and regulations such as POPIA and GDPR, he adds.
In addition to enabling faster, more accurate reporting, automated reconciliations offer the advantage of happier employees, Turnbull says. “Instead of being deployed to carry out mundane, repetitive work, automating reconciliations means teams can be assigned to carry out higher value tasks such as resolving transaction discrepancies. This means more value for the organisation and more fulfilling work for employees.”
Turnbull notes that modern automated reconciliation systems require a great deal of integration into enterprise solutions. He says: “To achieve full value from these systems, organisations should work with a local partner that has the industry knowledge and expertise to properly integrate and support the reconciliation system.
"MoData has the advanced automated reconciliation solutions as well as the specialist financial and technical knowledge to effectively support local organisations. Another advantage we have is that our software-as-a-service subscriptions are rand-based.”
Share