What is Reconciliation? · A huge advantage with an automated bank reconciliation system is that...
Transcript of What is Reconciliation? · A huge advantage with an automated bank reconciliation system is that...
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What is Reconciliation? The definition of reconciliation, in this context, is the process of comparing or matching corresponding transactions between two sets of data that
ultimately should be identical. Transactions found in one of the data sets but not in the other are said to be outstanding. In order to find the real
difference between the two data sets you must first match off all the transactions that are in fact a match, to find the transactions that are
outstanding.
”The manual
cross-checking of bank
statements against
one’s own ledger is a
tedious, time-
consuming process”
”The manual
cross-checking of bank
statements against
one’s own ledger is a
tedious, time-
consuming process”
Why Reconcile?Why Reconcile?Every organization needs to perform check reconciliation regularly to ensure the
correctness of financial reports and ledger balances.
The Cheque reconciliation feature allows the Accounting Group (AP) to reconcile the
checks produced to the cleared check records from the bank. Typically this is done
by matching the check file sent from the bank against the accounts payable
cheque’s record by the check number, issue date, payee and amount. The check
reconciliation process not only matches the cleared checks but also allows the users
to void and cancel stale checks.
Introduction
Lelogix's Cheque Reconciliation services give you fast, accurate
information regarding cheques cleared through your bank
accounts. You can match cheques cleared through your business
account against your issued cheque file.
We will automatically compare your electronic file of issued cheque
data to paid cheque files. We provide you with detailed reports on
cheques paid, cheques outstanding, and cheques with exceptions
(such as unmatched amounts), so you can easily detect
discrepancies in payment information.
BackgroundTreasury Department is the government agency of St. Kitts and
Nevis. The agency has started using Automatic Cheque
Recnciliation Service provided by Lelogix.
Stakeholders
Treasury Department, Ministry of Finance, St Kitts & Nevis.
Why Reconcile?The purpose of bank reconciliation is to find the transactions that amount to the difference between the bank balances and
ledger balances for a given period. These transactions are normally referred to as exceptions. The exceptions then need to
be investigated to ensure that there is a “normal” reason for why they are not matched and then finally put into a
reconciliation report. By far the most common way of doing bank reconciliation is to use a marker or pen and manually
match the transactions on a bank statement with the transactions on a printout from a general ledger. Every time a match is
found, it is then ticked off on the bank statement and on the general ledger printout. This time-consuming task is then
repeated until all matches are found and only the exceptions are left for investigation.
Manual reconciliation is time-consuming. And because this is an important task, it is normally performed by well educated
people on a good salary. Statistics tells us that, on average, a person can reconcile less than ten transactions a minute. If you
calculate the number of transactions for a given period, the average number of transactions a person can manually match,
and the salary of that individual, you can very quickly compute the cost of manual ticking-off involved in matching the
transactions. This is the part of the matching process that is absolutely unnecessary, because it can very easily and simply
be automated.
DRAWBACKS OFMANUAL RECONCILIATION
?Tedious & consuming
?Risk for human errors
?No managerial oversight
?Save days
?Make user happier
?Focus resources on
strategic matters
BENEFITS OFAUTOMATING RECONCILIATION
Challenges in ReconciliationManaging increasing volumes :
Currently, Treasury department and bank face the challenge of ever increasing volumes of transactions to be reconciled and the
complexity of new instruments coupled with regulatory compliance demands and also the need to reduce the inefficiencies in
their operations.
The need to reduce manual errors during reconciliation is of utmost importance to reduce potential operational risk and thereby
minimize operational cost without hindrance to the normal processes.
Reducing manual reconciliation errors :
Achieving data consistency
Achievement of consistency in trade processing, data management, accounting to comply with standards, clearance and
settlement, control and compliance should be able to define an integrated process flow management within an organization.
Diversified environment
Another major challenge facing the reconciliation analysis is the emergence of new asset types and structured deals with more
complex technicalities and calculations involved, which would require modification/improvement of existing systems to
accommodate reconciliation of such complex and diversified deals.
Solution of underline challenges Manual reconciliation is time-consuming. And because this is an important task, it is normally performed by well educated
people on a good salary. Statistics tells us that, on average, a person can reconcile less than ten transactions a minute. If you
calculate the number of transactions for a given period, the average number of transactions a person can manually match, and
the salary of that individual, you can very quickly compute the cost of manual ticking-off involved in matching the transactions.
This is the part of the matching process that is absolutely unnecessary, because it can very easily and simply be automated.
A huge advantage with an automated bank reconciliation system is that human errors are eliminated. When doing a manual
reconciliation process, the last step before creating the report is to ensure that no errors have been made during the matching
process. To do this you need to compare the sum of the exceptions with the difference between the two balances. If these
numbers are identical, your reconciliation is correct. What if it is not correct? What if you have made the number-one error in the
manual matching process and forgotten to tick off one or more transactions? Maybe you were distracted? Someone called you
or stopped by your desk to ask a question? This happens very easily, but hopefully you can find the error and can correct it. If not,
the cost of the reconciliation will have instantly doubled, since now you have to start all over again. Clearly the manual
reconciliation process is very costly. Automating the reconciliation process can save organizations a great deal of time and
money. The staff can focus their efforts on managing the exceptions instead of ticking off transactions that match. Exposure to
risk is greatly reduced because errors and fraud can be discovered earlier. Time saved can also free staff for higher value tasks
while enabling greater overall financial control.
Eliminate errors – automatically
Implementation and Maintenance
The ITMS-National Bank Integration project was initiated from Treasury department (Govt. of St. Kitts and Nevis). The existing
software used by treasury department does not having facility to reconcile checks or other transaction automatically. The
department user does the reconciliation manually. This process is very tedious and time consuming and need lots of man power
and manual effort. There are so many time the user makes mistakes while doing the reconciliation that need support from
technical person to resolve the problem. The department of treasury got hard copy of statement and checks from the bank every
day, this process also required man power effort.
The treasury and bank both parties want a flexible system to remove the above complexity to ease there day to day work.
Benefits include
Why Lelogix ?
Low Costs
Onsite/ Offshore delivery model
Provides End to End Solution
Experienced Resources
Production Support & Enhancements
Help you to get Software Licenses
Help you to get Hardware
One shop for all your worries
For any Query, please visit www.lelogix.com
The information contained in this document is proprietary.
©2017 Lelogix, All rights reserved.
Control of data : Automated reconciliation workflow derives process convergence, resolution and reduction of errors and
redundancies, increases productivity and compliance adherence.
Faster analysis : Saves effort in 90% of the processes associated with manual reconciliation.§ Business rules:
Automated matching process based on pre-set business matching rules. Automatic exception case creation for unmatched
data.
Integrated Process: An integrated business solution provides better collaboration between vendors, banks and
customers. This tool has a fully integrated exception processing.
Report generation : Automatic report generation highlighting mismatches and helps in manual analysis of predefined
business rules.
Automated workflow : Automated workflow derives process convergence, resolution and reduction of errors and
redundancies, increases productivity and compliance adherence.
Accuracy of activity
Error correction
Matching to the source
Documenting the process and completion
Ensure a consistent process
Verify transactions in a timely manner
Best Practices