Automation: An Answer to the Toughest Reconciliation Challenges
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Automation: An Answer to the Toughest Reconciliation Challenges

By Capital Markets CIO Outlook | Thursday, August 29, 2019

Reconciliation platforms are heading towards automation, and capital market firms are sure to gain several advantages with these automated software solutions.

FREMONT, CA: Capital market firms have successfully replaced many legacy processes with modernized operations. The process of reconciliation is also on the track of development and transformation. Accounting is one of the core processes, which is extremely crucial to every capital market firm. Through the use of appropriate reconciliation tools, capital market firms can quickly and efficiently manage financial data and conduct confirmation matching. Reconciliation platforms offer several means through which a company can gain better control and visibility. However, the most important aspect of these platforms is the level of automation that they are packing into their products.

Automation not only reduces the manual tasks but also makes them error-free. The advancement in technologies of artificial intelligence and machine learning have opened up the possibilities of automation. Hence, stakeholders in the capital market firms are looking to make a conscious shift from simple reconciliation to automated reconciliation. One might wonder when the right time is for a company to add automation to reconciliation. There is no straightforward answer to this since it might vary from company to company. Medium and large companies reconcile numerous accounts periodically. For such firms, manual reconciliation is a definite bottleneck. In this case, companies must look for a viable service provider who can assist in developing just the right automated reconciliation solution. 

Capital market firms can prioritize certain features when looking for the perfect reconciliation platform. Dashboards are crucial to the functionality of any solution. Unless a service provider offers a solution that comes with a well-designed and highly organized dashboard that helps track transactions and data to the last bit of detail, it might not be a good investment. Customizability is also a desirable feature. A dashboard should also give quick alerts when the system discovers any anomalies in the accounts. Xero is a cloud-based reconciliation platform with an online dashboard that allows one to monitor cash flow with graphs, make changes to reports and follow up on pending invoices. Its software also supports third-party app integration to enable seamless data transfer. 

Another critical aspect that automation enables is that of standardization. Reconciliation process spans across whole organizations and thus becomes channelized at times. Manual processes use multiple formats for reconciliation resulting in non-consistent and fragmented data. With automation, it is possible to apply a single format to all the reconciliation processes and thus streamline the collective balance sheet of the company.

On the selling-side, faster electronic confirmations are becoming important as speed becomes a crucial part of the business environment. Manual reconciliation process consumes a lot of time since it involves redundant tasks. Whenever a firm realizes that the delays in reconciliations are affecting its efficiency or productivity, it should immediately consider the prospect of an automated reconciliation solution. Automation reduces or eliminates the need for interference in external and internal audit queries, confirmations, and balance sheet functionalities. Latest reconciliation software suites handle heavy volume scenarios with utmost ease and efficiency. Scheduling capabilities of this software make it unique. It allows firms to schedule activities and subsequently automate all the processes like importing, mapping, enrichment, and execution.

Regulations across sectors see significant changes as trade risks grow. Ensuring compliance to regulatory framework is becoming essential. Automated reconciliation makes systems and finances secure by ruling out any chances of errors. Thus, capital market firms can benefit significantly from lowered operational risks, increased accuracy, and efficiency in account management with reconciliation solutions. 

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