Most finance personnel can agree that the reconciliation process is not easy.
Manual expense reconciliation can take up to 30 hours a week. It’s a thankless process where claims and receipts are collected and transactions are matched against the credit card or company statements one by one.
Assuming, of course, that all transactions match. But what are the chances of that?
Reconciling expenses is tiresome, but it can be made easier. So here are our top tips on how companies can make expense reconciliation smoother for finance teams.
Manual reconciliation is highly prone to errors such as keying in the wrong data and losing company receipts, which can further prolong reconciliation time. But with the right planning and proper systems in place, companies can reduce unnecessary manual time.
Plan and Budget Ahead
The main goal of reconciliation is to ensure company funds are being used appropriately. But it only works if the company has a solid plan for the funds in the first place.
Having a budget and allocating funds is crucial to forecasting seasonal fluctuation in employee spending. For example, your company won’t spend the same amount for ‘events’ every month and knowing that in advance will help your bookkeeper anticipate and record it accordingly.
Sorting out employee transactions into categories is also helpful for reconciliation, and many expense tracker templates can help your employees do that. These templates can speed up reconciliation and give companies an overview of which category utilises more funds.
Stop Using Paper
For most companies, spreadsheets and accounting ledgers are a thing of the past.
Finance personnel receive different types of papers during the reconciliation process, such as receipts, invoices, purchase orders, and credit card statements. Organising and sorting through these documents is highly tedious, especially when so many employees are involved.
Most of these papers also need to be stored and kept, which is not ideal when some can be easily misplaced. It’s no wonder that loss of receipts is the biggest pain point cited by finance teams in expense management. Papers are also not ideal during audits when information is needed quickly — as such, having easy access to financial statements would undoubtedly help during audits.
Ensure that the reconciliation process is easy and efficient
To reconcile efficiently, companies should ensure that they have a simple and straightforward process. Having a standard practice, such as following the same templates, submission timelines, and policies can help finance teams speed up reconciliation.
Here are some other metrics of what an efficient expense reconciliation looks like:
- Having error-free documents
- Each expense is correctly matched with company statements
- All documents needed for reconciliation are submitted and readily available
- Transactions that violate company expense policy is easily flagged
- Doing all this with minimal time
According to a study by Ernst & Young, 95 per cent of reconciliation efforts by a finance team goes into looking at the validity of transactions rather than sorting entry-related problems. So efficient reconciliation is so much more than just being error-free; it’s about saving the company from fraud.
Automate your expense management process
Automation has made such a big impact on organisations everywhere, and it’s becoming a massive trend in account reconciliation. 60 per cent of companies have recorded a positive ROI within one year of investing in an expense management solution.
By using an automated expense management system, it quickens the reconciliation process because:
- Finance personnel and managers can set budgets and track their company’s expenses in real-time, not just during reconciliation.
- With an automated system, employees use pre-loaded cards to make purchases, and it’s automatically reconciled in the software.
- Employees can digitise their receipts and invoices by taking pictures and uploading them into the system for approval.
- Finance teams and employees follow a simple, streamlined process that cuts through all the tiresome tasks.
Reconciliation is the perfect task to automate, as it’s a repetitive job that can be done quickly and error-free by a computer, so why do it manually? By speeding up this process, finance teams can have more time to perform higher quality work.
To learn more about how Budgetly’s preloaded cards and software help companies with reconciliation, download our eBook, Managing Expenses with Budgetly. Alternatively, schedule a demo with us today for a personalised chat with our team.
