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Case Study - Progressive Credit Kenya: automation of daily bank reconciliations in the microfinance business

Industry:

Financial Services, Lending

Focus:

Bank reconciliation, streamlined exceptions management

Customer profile: a growing and innovative microfinance organization 

Progressive Credit is a growing microfinance organization founded in 2011. The company operates in 27 branches across Kenya with the mission to design innovative credit product tailored for consumers and small businesses. Progressive Credit provides quick, flexible loans for Agribusiness, SME & Corporate asset financing and consumer credit facilities such as logbook or salary loans, urgent cash for school fees, emergency, or medical needs.

Challenges: managing large volume bank reconciliations manually

Progressive Credit is a typical example of a growing finance services institution with intensifying daily reconciliation needs. Progressive Credit’s lending activity generates steadily increasing monthly transaction workloads currently in the thousands per day. The customer turned to ReconArt with existing bank reconciliation process performed manually in Excel spreadsheets. 

The reconciliation team split the work by servicing bank (5+) and each team member processed data from 3-5 different payment channels. Loan disbursements came in batches in the GL. Lump sums had to be unbundled with the underlying transactions matched individually to the GL records. The transaction amounts and the complexity of the matching were overwhelming. 

Replacing manual reconciliations with enterprise-class automation was the way out of the deadlock. Progressive Credit also needed enhanced visibility on account status with clear and timely reporting on matched vs unmatched transactions. Members of the Finance and IT departments were involved in the search and assessment of reconciliation solution alternatives.

Solution: end-to-end automation of bank reconciliations unlocked

Progressive Credit selected ReconArt for its robust matching capabilities. The platform’s full configurability accommodates the client process specifics. Within ReconArt, reconcilers transform their business logic, however complex, into machine executable rules written via Excel-like expressions and functions. ReconArt maintains granular access control to the reconciliation accounts and enforces separation of duties. The software captures a granular audit trail at transaction level.

The Matching module enables record comparisons by multiple user-defined rules. Matching on more than one criteria improves accuracy and reduces the number of unmatched transaction where a unique identifier is not present. ReconArt support complex matching relationships: 1-to-1, 1-to-many, many-to-many and groupings to handle lump sums in the bank statements.

ReconArt also streamlines and speeds up exceptions resolution. The system flags unmatched records automatically by applying configurable update rules for categorization of fees, time delays, duplicates, etc. Similar items can be assigned for further investigation, sorted and filtered, exported as journal entries, with ongoing tracking to clear up the backlog of aging transactions.

The file format used in the client’s existing reconciliation process are supported out of the box, as well as most of the standard banking formats. ReconArt can be integrated with any ERP or third party solution, using one-time configurable import (or export) templates to regulate the data transfers in or out of the system. Sophisticated ETL capabilities enable automatic data transformation / enrichment and eliminate manual operations in preparation for matching or reporting.

Benefits & results: streamlined, fast, auditable reconciliations

The implementation of ReconArt for Progressive Credit kicked off with two major bank reconciliation processes and on-the-job training running in parallel. ReconArt hosted in the cloud went live with Progressive Credit in early 2022. Since then, the client team have added quite e few new processes on the platform themselves, emerging as independent, self-sufficient users.

ReconArt is a truly business-owned system. Progressive Credit have been convinced that ReconArt is an intuitive and user-friendly tool that does not require programming background. Excel skills, widely prevalent among F&A professionals, has been applied in the creation of matching rules, removing the inefficient manual spreadsheet manipulation.

Today Progressive Credit enjoy streamlined, fast, auditable reconciliations. The team has benefitted greatly in terms of time savings, improved visibility on account discrepancies, team productivity gains and overall process efficiencies since the implementation of ReconArt.

Nicholas Muia, Assistant Head of Finance at Progressive Credit, says:

The platform has been quite friendly and has been of assistance to us, considering where we have come from in terms of reconciliations – we were doing our reconciliations on a spreadsheet. And now, in a click of a button…reconciliations can run in minutes or rather in seconds. We are very happy about the platform.

The Progressive Credit team is working towards full utilization of the platform capabilities. ReconArt is flexible and scalable to secure plenty of room for expansion. The client is willing to explore the ReconArt Financial Close Management module and balance sheet account reconciliation & certification features further down the road.


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