How to Work Smarter: Bank Reconciliation in ERP

Catch any CPA in an unguarded moment and ask him which processes in his career are the most tedious and error-prone. You’ll almost certainly hear, in addition to manual data entry and check processing, that bank reconciliation ranks among an accountant’s most unrewarding tasks.

For those of you who haven’t had the privilege, here’s how bank reconciliation works. Take paper copies of your organization’s GL and lay them side-by-side with the corresponding bank statement. Using a pen, look back and forth between the pages, verifying each line in turn. You might add a technological varnish, but stripped down, whether between physical pages or Excel spreadsheets, the process remains the same.

The tedium has high stakes. Close ties between bank and business provide one of the best ways to detect and fight embezzlement. Businesses depend on reconciliation to detect lost checks and missing payments, to monitor organizational performance, to budget and report and close the books when periods end. Errors can take days to find and hours to correct, and the specter of monetary loss haunts every mistake.

Public companies have seen the importance of bank reconciliation soar since 2002, when the United States Congress passed the Sarbanes-Oxley Act. Drafted in response to high-profile accounting scandals at Enron and WorldCom, Sarbanes-Oxley tightened reporting and action requirements for material errors. Bank reconciliation provided exactly the sort of trustworthy internal control managers needed.

ERP systems rarely ease the load. Despite electronic integration, Excel and Access continue to underpin the reconciliation process. Even some of the fastest-growing cloud providers demand extensive manual involvement. Accountants must often shuttle between applications, importing and approving, efficiency always barely out of reach. One of the largest non-profits in the United States had to hire dozens of external consultants for months on end in order to code bank reconciliation into an ERP system that lacked it.

Few CPAs would disagree about the ideal solution: A system that automatically integrates with your bank and reconciles your accounts on a daily basis. A system that records every interaction, edit, and alteration. A system that frees your accountants from the burden of line-by-line verification.

Uniquely among ERP vendors, Xledger offers precisely this. Our automatic bank reconciliation tethers bank and business, empowering executives with a risk-adjusted view of their financials. Every day, the Xledger system thoroughly reconciles transactions and invoices. Decision-makers can analyze data and create actionable items without risking a long and fallible process.

For a better understanding of Xledger’s revolutionary automation, including bank reconciliation and OCR scanning, watch the brief animation below.