Automation, key financial reconciliation

For most companies, the transactional portion of the finance process is partially automated via one of the established enterprise resource planning (ERP) platforms. But more often than not, the process of reconciliation, analysis and reporting that precedes the creation of the financial statements (and other reports) remains a veritable black box: an opaque, unauditable series of manual processes. This “last mile of finance” is now starting to weigh heavily on CFOs as they come under sustained pressure for greater transparency and radically better governance from regulators and shareholders alike.

Let’s be frank: the typical reconciliation environment is one in which the lever arch file plays a big role, with all the resulting problems of inadequate audit trails and misfiled pages. The other key element is the proliferation of spreadsheets on which the information from files and the transactional systems is captured. By their very nature, spreadsheets are an auditor’s nightmare as they exist outside of any governance structures and so the integrity of the data they contain is always in question.

All of these factors make for a very messy reconciliation process, and it’s not unusual for queries to remain unresolved from one set of financials to another. It’s worth bearing in mind that the process of reconciliation is by its very nature extremely complex as it covers the full gamut of the company’s activities over the period. Manual reconciliation makes the auditors’ work exceptionally difficult too—and this at a time when auditors are exposed to significantly more risk from audits that are held to be inadequate.

“The key to solving this problem is greater automation of this last mile of finance to provide absolute transparency, enforce best practice and greatly enhance both the speed and accuracy of the whole process,” notes Roenell van Zyl, a business analyst at professional services firm Barnstone. “This is a situation in which taking the whole process online via a solution like Trintech has tremendous benefits.”

Trintech provides an integrated platform for this last mile of finance that bolts onto the existing transactional systems. Its universal file processor means that any file format can be accepted onto the platform and integrated into the closing process.

Van Zyl says that the case for automating today’s finance black box of manual reconciliation processes is strengthened by the growing move to the shared services model by finance organisations. The shared services environment requires the automation of as many finance processes as possible, which in turn requires them to be much more transparent and better governed. In this way, the transition to shared services using a solution like Trintech’s opens up the black box to scrutiny and control.

Automation brings with it a number of additional advantages. One, obviously, is to allow the company to configure the system according to its business rules. In this way, it becomes impossible for a query to simply remain unresolved: the status of each query is reported to managers and executives as a matter of course. By the same token, the system enforces a consistent process based on industry best practices.

Automation also reduces costs considerably by making the auditing process much quicker and thus less expensive, and by enhancing the productivity of finance staff—closing can take place in a matter of days rather than months. And reporting that is more accurate and can be completed quickly is obviously of enormous benefit in helping support  better decision-making by executives.

“No more spreadsheets and over-manipulated data, no more human error,” concludes Van Zyl. “In our experience at Barnstone, automation turns the black box into a crystal-clear, fully auditable process that adds enormous value to the company’s overall performance, and makes compliance that much easier.”

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