It’s been a great and beautiful year so far here at ReconArt. This has even been true of the weather. As a native Englishman I naturally think and speak often (often meaning daily) about the weather. So I have felt blessed to be able to walk the two miles each morning in just shirtsleeves to our corporate office just outside of Washington DC. That was until this week. For the first time in months, I had to put on a coat this week, and then it suddenly dawned on me “Wow, it’s the middle of November. I’m in the Northern Hemisphere right now. It’s almost winter. Actually, it’s almost the end of the year.”
Now, year end can be an interesting time for so many of us whose financial year coincides with the calendar year. The joys and celebrations of the Holiday season cruelly mask what’s coming next. Closing the month of December, the quarter, the year, the books, internal audits, external audits, financial reporting, etc.
And then the question pops up: “Wouldn’t it be great if we could introduce technology to ease and speed that whole process?” Of course, I know that many of us will be asking that question in the first quarter of next year. But wouldn’t it make life easier if we already had a system in place? Wouldn’t it ease discussions with our auditing partners if they could see that risks in 2016 will be lower than in 2015 and compliance will be greater? The answer, naturally, is ‘Yes’.
Still today, from organization to organization, people are reconciling their accounts manually. By manually I mean printing reports and downloading statements, entering data into spreadsheets, emailing queries and documents that need review and approval, then creating checklists to ensure everything is approved on time. After that, when the auditors start their work, they are hunting for collateral and answers. When the dust settles, they are often being asked to put more (manual) controls in place to ensure adherence to sound business practices and financial compliance with regulations and ever-evolving legislation.
Surely, we are all guilty of putting things off. We instinctively know that certain tasks will be a headache at an already busy time in the future, so we tell ourselves that we will deal with them later. But why? Oh yes, time. There’s no time now to take on a new project.
Let me share a few facts with you.
- Reconciliation is a pain. Whether it’s the daily matching of transactions or the reconciliation of balance sheet accounts at month end.
- We all do it (as in the companies we work for all have to reconcile). It is necessary and unavoidable.
- Most of us do it pretty manually – the need is addressed with people and limited tools by brute force.
- Most of us have no idea what it’s really costing as the hours spent performing it, following up, dealing with audits, leaning on IT to create reports and metrics, etc. are often covered by salary costs. The true cost is hidden.
- Risks associated with under-performing on control activities might not be well-appreciated. What if things aren’t done accurately? What if things aren’t done on time? What if discrepancies aren’t recognized in a timely way and addressed?
- Many of us think that automating the process will be a big project that will cost thousands and take months of upheaval – the last thing one should be considering at year end.
The first five are true. The sixth – at least for our clients – is false. Now here are some more facts that you may find surprising:
- Automating your reconciliation practices can be a rapid process. Read here how fast-growing, online portal Teespring automated its daily reconciliations in just two weeks.
- Putting in an automated solution for daily and/or month end reconciliations before the end of the year might not solve all the issues of the past (unless, as we often do for new and growing clients, we clear a backlog), but it will sure make discussions with your auditors and compliance officers a whole lot easier. Read here how geographically expanding Premier Group now has much greater confidence in its financial reporting by having automated its reconciliations.
- You can usefully spend a little time now – before the real pain of the 2015 financial close starts – to make life in 2016 a whole lot easier.
- You can save money. Read here how Fiesta Insurance saw an almost immediate return on investment and has since enjoyed year-on-year savings to fuel its growth.
So, in summary, if you have just a little time now, or want to save a whole lot of time in 2016, or if you have some 2015 budget still available (but remember, even without budget you will be in the black), remember: it’s not too late to automate. And just in case you forget you still have time now, bookmark this page and set a reminder to pull it up in mid-January when you are right in the thick of things, and try not to think of me saying “I told you so”. While now most likely will be best, it will never be too late to automate.