How to Do Balance Sheet Account Reconciliation

Next, compare the information from the general ledger to the supporting documents. Nanonets can process large volumes of transactions quickly, significantly reducing the time spent on manually reconciling each transaction entry individually. The rationale for moving the reconciliation process inside the financial close is compelling. Along with centralizing the data, SolveXia performs accurate transaction matching in just minutes, as opposed to the hours, days, and weeks it may take to do manually. Given the manual effort, it is also likely to be error-prone, which can lead to larger issues if financial statements are incorrect. It can also negatively affect the financial integrity of an organization, especially if fraud remains undetected.

Let us understand the disadvantages of the balance sheet reconciliation policy through the points below. A balance sheet reconciliation software template has been provided below for a better understanding of the concept and its intricacies. By automating and improving the bank reconciliation process, HighRadius provides your company with what it needs to ensure accurate, efficient, and compliant financial management. However, in reality, there may be discrepancies between the subledger and general ledger balances, making it essential to perform regular balance sheet reconciliation to identify and correct any discrepancies. Ensure the ending balance on the general ledger matches the supporting documents. Then, document the entire reconciliation process by creating a report or summary.

This allows finance teams to allocate more time to strategic tasks rather than being bogged down by the manual compilation of supporting documentation. This frees up the time and resources of your finance team so they can spend less time on repetitive manual tasks and more time on value-adding analysis and investigation. At the same time, this information is often used by outside advisors such as bankers and insurers to evaluate the creditworthiness of your business. And having accurate and timely disclosures is vital when looking to attract investors. We focus on reconciling balance sheet accounts because they reflect a company’s assets, liabilities, and equity at a specific point in time. Accurate reconciliation ensures the integrity of the financial position, identifies errors, and helps prevent fraud, providing a clear financial snapshot for stakeholders.

Reconciliation Data Sheet

1. HighRadius’ comprehensive AI-powered Record-to-Report suite helps you and your company optimize cash flow management and decrease reconciliation delays.
2. There’s no need to reinvent the wheel – before you try to build a new workpaper from scratch, see what reconciliation templates already exist.
3. It is estimated that manual reconciliation can lead to an extra 5-7 business work days of error rectification and bookkeeping, problems that can be solved via automated reconciliation software like Nanonets.
4. This includes providing training on new technology solutions and best practices for reconciling financial data.

So it is critical for executives to have timely access to reliable financial data. Account reconciliation is the process of matching internal accounting records to ensure they line up with a company’s bank statements. Account reconciliation relies on large organisation and the upkeep of invoices, account balances, balance sheet reconciliation and more. Providing training and support to accounting teams can help improve the accuracy and efficiency of the reconciliation process. This includes providing training on new technology solutions and best practices for reconciling financial data. Investing in team days inventory on hand ratio development also helps improve job satisfaction and employee retention.

Commit to continuous improvement

That includes monitoring reconciling items to understand aging and potential write-offs, as well as categorizing items to understand the root cause and fix upstream problems. The challenge of extracting numbers from disparate places remains a major contention for senior finance professionals. Around a quarter of respondents who researched financial reporting last year by FSN said they spent too much time on data collection from multiple sources. The analysis highlighted the desire among respondents to spend more time on financial risk management and analysis and performance measurement activities. In single-entry bookkeeping, every transaction is recorded just once rather than twice, as in double-entry bookkeeping, as either income or an expense.

Streamlining the Reconciliation Process

This includes cash accounts, accounts receivable, accounts payable, inventory accounts, and any other balance sheet accounts that require reconciliation. Nanonets’ Intelligent Document Processing is trained on 1M+ documents to leverage automated matching of transaction entries. This mean those transactions are identified as the best match based on column names, date, amount etc ensuring 95% accuracy. When these algorithms fail Nanonets tries to make a match using fuzzy matching capabilities as a failsafe. Low-risk accounts are then typically reconciled outside of the financial close because they do not substantially impact the accuracy of the financial numbers.

With information from a balance sheet, a business owner has a clear understanding of how the business is performing. If all goes well, account reconciliation makes sense and is accurately representative of the business’ transactions to match its bank statements. However, this tedious task and the highly necessary procedure can easily cause unnecessary stress on a financial team and be rife with mistakes, especially as the business grows through new customers or acquisitions. It becomes even more complicated when staff are on holiday or sick during the process.

How to Overcome Challenges of Balance Sheet Reconciliation?

The pandemic forced accounting and finance teams to figure out how to close virtually, almost overnight, and those who already had the right technology in place were able to close on time—and with confidence. Accountants must reconcile credit card transactions, accounts payable, accounts receivable, payroll, fixed assets, subscriptions, deferred accounts, and other areas against the general ledger, or balance sheet. Despite the advantages mentioned above, there are a few factors that act as a hassle for accountants and auditors while reviewing the books of accounts.