This decade has been very significant for Banks and Financial institutions in terms of many technological advancements. One of the most important being switching from all manual processes to an automated workflow. General ledger accounts reconciliation is one such example. With automation, this critical process can be performed swiftly with more accuracy & efficiency. Let’s discuss the importance of the general ledger accounts reconciliation process and why there is a need for automation.
What is General Ledger Accounts Reconciliation
General Ledger Reconciliation is an important activity that verifies the company’s GL account balance integrity. Account balances are compared with other independent systems, cash flow statements, revenue sheets before generating the financial report. It’s an important part of the financial closure process and is used to verify balance accuracy.
Importance of Performing GL Accounts Reconciliation
Below are some of the tasks associated with general ledger accounts reconciliation that makes it a significant activity for banks :
- Checking the accuracy of all the financial statements
- Maintaining a complete record of the transaction channel/business unit financial activity in the system.
- Find out discrepancies within a short time of its occurrence and alert.
- Derive the incoming and outgoing charges, fees, and payments into respective GL accounts
- Helps to resolve the customer disputes and chargebacks quickly
- Enable financial institutes to have a clear understanding of cash position & its flow to make decisions for improving their business
Why an automated GL Accounts Reconciliation Software?
Identification of Errors & Deriving EOD GL Balance with Al algorithm- Identifying errors and deriving EOD GL balances in complex sets of transactions is not easy for banks. With the AI algorithm of automated GL accounts reconciliation software, financial institutions can get an accurate GL balance from an error-free process.
Automation for Upgrades– Automation simplifies the process of upgrades. The software will be automatically updated so that financial institutions can perform GL accounts reconciliation based on current trends and instructions. It enables them to have a competitive advantage over others.
Reconciliation Templates & Self-Service Facilities- GL accounts reconciliation software is preferred in the industry for its predefined templates & self-service offerings. This reduces GL balancing & reconciling time significantly, and also, the reconciliation process can be performed with minimal guidance & training.
Compliant with Regulatory Mandates– Integrating an upgraded GL accounts reconciliation software offer banks the assurance that the service is regulatory compliant. It performs all the GL balancing activities as per the industry mandates.
Detect Fraudulent Activities in Record Time– It is common to notice the expense through embezzlement or fraud. With GL accounts reconciliation, the detection of fraudulent activities through an accurate audit trail becomes effortless and less time-consuming.
Verifying the Current Cash Flow of the Business– Cash flow verification is as important as detecting errors or avoiding penalties. Validating liquidity supports banks to have clarity about their current cash position. This process ensures that financial institutions are making wise decisions according to their financial health.