The Future of Work

Why Automating Reconciliations Is a Must for Accounting Teams

About the Author: Katie Thomas, CPA, is a content creator, 2021 40 under 40 CPA Practice Advisor recipient, and the owner of Leaders Online, where they help accounting professionals increase their impact, influence, and income through thought leadership and digital marketing. Feel free to visit Leaders Online or connect with her on LinkedIn to get in touch with Katie. 

Being an accountant and dealing with reconciliations go hand in hand — it’s just a part of the job. However, for many accounting professionals and teams, it’s a constant source of stress. When done manually, reconciliation can be a time-consuming and cumbersome process that eats one or even multiple days a month. However, in recent years, the market has developed numerous ways to handle large volumes of reconciliations with automation.

Automating reconciliations can free up valuable time, allowing accountants to focus on higher-value tasks. But to truly understand the importance of automating this process, you need to know why manual reconciliation is so problematic.

The Problem with Manual Reconciliation

Reconciliation continues to be a significant stressor for accountants. Why? Because many are still manually reconciling numerous accounts with varying numbers of transactions. Here’s why that’s a problem:

Accountants Have Less Time for Higher-Value Tasks

Manual reconciliation is a time-consuming process, and the larger the organization, the more tedious the process becomes. As a result, accountants are left little time for higher-value tasks. This long-standing problem has only been made worse since COVID, as more accountants were and are continuing to be called to take on strategic advisory roles. It’s challenging to find time for this role when you’re dedicating so much of your day to comparably lower-value tasks like reconciliation. 

Whether you’re a public accountant or a controller at a larger organization, you can likely relate to this feeling of being spread too thin. Reconciliation can push you to your limits, and finding time for the advisory role that’s now being expected of you can feel like an uphill battle.

I had my first experience completing reconciliations when I was in college and served as treasurer for my sorority. To my surprise, I found the books to bank balance was off by thousands of dollars. Sorting out the discrepancies was a long, cumbersome process. I remember thinking: What would this process be like at a large organization? I’m only dealing with a college sorority. While I was so glad to turn that job over to the next treasurer the following year, most accountants don’t have that luxury. They’re doing it month after month, year after year. Making matters worse, they’re being asked to close the books faster and faster. 

Demand to Close the Books Faster Increases the Risk of Errors

When reconciliations are done the old-fashioned way, there are no shortcuts. If you want it done right, it’s going to take time. Time is a luxury that both accountants and businesses simply do not have.

On the contrary, organizations are constantly under pressure to get the books closed as quickly as possible to figure out their next move. They need reliable, accurate data to make these decisions. However, rushing the reconciliation process only increases the risk of errors and inaccuracy. Inaccurate or erroneous data does little good for businesses looking to make strategic decisions about the future of their operations.

The demand for quicker financial closes can leave accountants feeling uneasy about the whole process. In fact, a survey from IMA found that only 28% of financial professionals trust the accuracy of their financial reporting data. Further, only 20% felt good about the closing process.

Reconciliations Leave Accountants Stressed and Burnt Out

Ask any accountant who deals with month-end close, and they will tell you that it’s a recurring stressor that impacts not just them but their family, others around them, and even the management at the company they’re working for. 

I got my first insight into the month-end close process growing up. My father was a business owner. Every month I knew when it was month-end close because he’d have to be at work too early to take my siblings and me to school, and he’d come home long after we’d gone to bed in the evening. Now that I’m older, I have a lot of friends in the accounting industry and have witnessed them miss out on important life events because of reconciliations/month-end close. They canceled their birthday dinners and missed their kids’ soccer games because of this time-consuming process. 

Yes, reconciliations are necessary, but when done manually, they can easily leave accountants feeling stressed, burnt out, and having to say ‘no’ to important people and events. This takes a mental and physical toll not only on them but also on others around them.

Why It’s Important to Automate Reconciliations

Reconciliation is a grueling task, even if it should be routine. While reconciliation is often easier for a very small business, it typically gets incrementally more challenging as a business grows. If a company doesn’t reconcile its accounts, it can lead to:

  • Disconnected and inaccurate data sources
  • Incomplete data
  • Missing data
  • Poor decision-making
  • Fraud
  • Etc.

Due to the intense, long hours involved with reconciling any number of accounts, it makes sense to automate this essential task. Apart from the time saved through automation, it’s beneficial for businesses to automate this task because it improves decision-making and reduces errors.

Worried your accountants may not embrace the chance of automating the process? The good news, approximately 66% of accountants embrace automation. And, this figure seems to keep rising.

Accountants Can Focus on Their Advisory Roles

When automation is introduced, businesses enjoy many benefits, such as:

  • Financial close process acceleration
  • Accountants having time to focus on high-value work
  • Improved productivity
  • Better work-life balance
  • Fewer errors

In a fast-paced environment, it’s crucial to automate manual tasks that can be automated properly. Reconciliation is one of these areas that free time up for accountants to focus more on their advisory roles.

Automation Reduces the Risk of Errors and Ensures Accuracy

Humans make errors. When accountants burn the candle until midnight and work extra hours to reconcile accounts, they’re tired, burnt out, and more prone to making errors.

Automation removes the manual steps in the close process and:

  • Assures accurate figures
  • Provides the most up-to-date numbers
  • Reduces common errors

Further, it is not uncommon for the trial balance to change after close. Companies and accountants can ensure that the most recent numbers are provided when automating the reconciliation process.

Enhances Control and Transparency

As with any part of the business, having internal controls and transparency are important. Managers and controllers benefit from automation by seeing the entire reconciliation process step-by-step. Additionally, since the entire process is outlined step-by-step and with end-to-end visibility, the risk of financial fraud declines with automation.

Combats Burnout and Stress While Improving Work Satisfaction

As mentioned previously, the reconciliation process is cumbersome, tiring, and repetitive. This can lead to:

  • Poor work-life balance
  • Lack of work satisfaction
  • Stress

When companies opt to automate the reconciliation process, they improve their decision-making while also improving the lives of internal accountants. It’s a win-win situation for businesses.

If you’re considering automation, there are many options. FloQast Reconciliation Management Solution is one option that helps accounting teams and controllers automate the entire reconciliation process with greater accuracy in less time.

See how Reconciliation Management can help your accounting team get out of the weeds