Reconciliation: a word that can send powerful shivers down the spine for any finance professional.
For most small businesses, if not all, reconciliation is a crucial task, yet often deemed to be one of the most tedious and laborious task: a box-checking exercise to close the books. It is no surprise that this task is often overlooked with very little attention or investment.
What is reconciliation?
In accounting, reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.
Generally, every transaction that a business makes typically has to be reviewed and verified by at least two forms of documentation, that includes an internal record as well as an external statement such as from a bank.
Why is reconciliation important for small businesses?
Inaccurate and inefficient reconciliation process can have dire impact within any business, small or large.
According to past research in the late 2012, 90% of companies still reconciled manually, using Excel spreadsheets, often leading to further human error.
In the 2021 Censuswide study, findings have revealed that from 306 surveyed participants including COOs, heads of financial control and financial transformation from financial services organisations, 17% have noted they are exclusively using manual processes for reconciliation.
The reduction of manual reconciliation indicated positive improvements and deployment of automation tools in the reconciliation process.
In parallel to this trend, according to the 2023 report ‘A Strategic Plan for Australia’s Payments System’, there has been an evolving shift in the payment landscape in Australia that is also mirrored globally, accelerated in recent years due to COVID, there is an increasing demand for near-instant and seamless payment experience.
Therefore, adopting modern digital tools to automate reconciliation is crucial to promote a safe and resilient system, leading to a more productive, innovative economy.
Exciting times!
What are the benefits of automated reconciliation?
Proper reconciliation can allow small businesses to see benefits across the company:
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Improved financial accuracy: Regular reconciliation helps small businesses detect and correct errors such as double entries, missing transactions, or incorrect amounts. This ensures that financial records are accurate and up-to-date, therefore leading to better decision-making process.
- Enhance cash flow management: Reconciliation helps identify discrepancies between actual cash flow and recorded transactions, allowing businesses to address issues promptly and avoid potential cash shortages.
- Minimising financial risks: Regular reconciliation can uncover unauthorised transactions or discrepancies that might indicate fraud or theft. This proactive measure helps in mitigating financial losses and safeguarding assets.
Are you in search for a modern solution to automate your reconciliation process?
You’re in luck as Budgetly empowers you and your employees by increasing your spending efficiency in a matter of clicks!
Budgetly is an innovative all-in-one expense management platform for all industries. By leveraging Budgetly, businesses, like yours, can bid farewell to costly, time-consuming, and outdated practices, empowering them to allocate resources more efficiently and focus on their core mission of their business.
Budgetly automatically synchronise your employees cards payments to Xero, with receipts attached and tracking categories, saving you hours, or even days on reconciliation every month.
For those who are using other accounting softwares, simply export from Budgetly in one click and upload a CSV.
Want to learn more? Make the move on your businesses expenses, schedule a demo with us today, or watch a 10-minute recorded demo.
