Don’t Drown in Transaction Data When Closing – Light a Match and See Clearly

High volumes of data continue to rise and it is required for Finance & Accounting (F&A) to provide analytics and uncover hidden patterns, correlations and other insights that drive the business forward. Whether there are transactions from credit cards, inventory, cash, assets, gaming, etc., the ability to access this data is critical for analytics to provide transparency in areas such as risk, marketing and audit to drive value and provide transformation.

With the high volumes of financial transaction data and requiring the ability to generate notifications for exception items that can’t be identified easily, many organizations may spend exorbitant amounts of time creating spreadsheets and manually identifying those transactions for verification while mining for those high-risk items. This causes the period ending reconciliation to be a daunting task, while precious resources are spending their time trying to find and resolve those exceptions. Even worse, many organizations choose to skip this reconciliation at the financial transaction level and leave themselves open to error, fraud and misstatements. As such, it’s vital today to have your highly talented resources focused on working strategically on a daily, weekly or monthly basis. This includes analyzing exceptions flagged through risk intelligence and approving transactions, such as Intercompany, through a rules-based workflow while the bulk of the transactions are intelligently matched as part of your Record to Report solution.

Cadency Reconciliation Match (Match) can transform your data and drive value by rapidly performing enrichment of data and complex matching for your financial transactions on a daily, weekly or monthly basis. The period end reconciliation process will then become risk intelligent and automated through a detailed workflow, identifying high risk exceptions, automating journal postings, producing a reconciliation at period end and providing reporting and drill down capabilities through a System of Controls for the Record to Report (R2R) process. As you look at matching solutions as part of your R2R process, it is critical to examine their functionality in the areas of:

Importing and Scheduling

With ease, high volume transactions and balances can be imported via an ERP connector or any text file with dynamic mapping and transformation capabilities. Scheduled jobs can run periodically such as hourly, daily, weekly or monthly. These automated tasks are configurable and can run as independent or dependent for importing, matching, identifying exceptions and reporting according to your business requirements.

Matching

Due to the flexibility and robust business rules for matching, many limitations can be overcome by ordering matching rules to receive the greatest percentage of matches for specific accounts. This saves valuable time compared to other tools, such as being engulfed in Excel spreadsheets, and applies complex algorithms. Rules may vary for 1:1, 1:Many or Many:Many and can be very specific to identify data to be matched with certain criteria or disallow matches with other criteria defined by the administrator. Data enrichment upon import, provided by translation lookups, can transform the data to compare the same text fields or string searches for greater efficiencies. All of this can be done with proper security profiles in place for segregation of duties and audit purposes. This virtually eliminates risk, saves valuable time and drives value. In addition, ensure that your matching capabilities can perform this without requiring multiple roll-ups of the data to achieve the matching which eliminates the opportunity for drill-down into the data.

Workflow Approval

Intercompany transactions go through preventive control measures that allows the invoice to be entered upon notification of a transaction request. The invoice will route through an approval process and automatically flow to the general ledger based upon rules and parameters that can be secured by the user role. Matching occurs across companies to avoid scores of exceptions and research at period end for reconciliation.

Exception Management

With high volumes of transactions, a user should not be spending valuable time tracking down exceptions such as credit cards with charge-backs, cash accounts with missing deposits or disbursement accounts with fraudulent checks. Exceptions can be identified with a variety of rules by account, data fields, status of transaction, etc. When that exception has been identified, through an exception management process, it will be routed to the user responsible for that account with drill down capabilities to then act. Those actions, accessed from within Match could consist of emailing an appropriate party for follow-up, creating a document or a comment, creating a journal entry or cases for reminders. All of this can be done through configurable rules, or ‘on the fly’ by transaction, providing all audit capabilities when needed.

General Ledger Entries

With ease, general ledger entries for transactions such as invoices, bank fees, multi-currency differences, adjustments, check discrepancies, etc. can be automated and formatted to go directly to the general ledger. If the entries require approval, this can be done by a set of rules such as amounts, dates and other data fields prior to exporting to the general ledger. Formats are configured to match ERP system requirements which can then be scheduled periodically as needed.

Reporting and Exporting

It is critical that the matching solution you are evaluating includes robust reporting, so you can access, interpret and present the data however you need it. For example:

• Detail Transaction Reporting: A robust internal reporting tool exists in Match that will provide details or summaries showing transaction activity in a variety of ways. These reports can be emailed, exported in several formats and separated by hierarchies for distribution to specific contacts.
• Matching Statistics
• Balance Variance Analysis
• Disbursement Exceptions
• Audit Trails
• Aging
• Outstanding Activities

Reconciliations

Finally, period end has arrived and virtually all the matching and exception follow-up has been completed prior to running an automated reconciliation. While performing the reconciliation, all reference fields from Match flow via an API into Cadency Reconciliation Certify, for easy reference. Communication flows back and forth as Match items are refreshed, or comments are made from the reconciliation. There are edit checks and warnings if there are any changes, such as balances or transactions that occur within Match or Reconciliation Certify that affects the reconciliation, leaving management worry free and ensuring that all controls are in place.

Working through your daily financial transactions is critical whether you have 100 or 1 million transactions in a period. Utilizing a solution like Cadency Match will enable you to do this in a way that leverages Risk Intelligent RPA™ to identify exceptions and flags the high-risk items for review by your team and automates the process through matching to period reconciliation for your R2R process. This is then integrated into Cadency and visible through the R2R Console. The Cadency R2R Console enables status to be presented to management in a way that is coherent for match through reconciliation, close and beyond. The user can click on those exceptions to find the details needed by strategically being guided through the process with a series of clicks. Through a diverse set of configurable and auditable procedures, your finance organization can be assured of compliance and risk aversion by setting up company policies through processes in Cadency as an ‘all in one’ solution.

Explore the Full 7-Part Series on Trintech’s System of Controls:
Part 2: Reconciliations: Part of a Global System of Controls to Ensure the Integrity of Your Financial Close
Part 3: Eliminate 95% of Manual Journal Entries and Reduce Risk at the Same Time – Mission Possible
Part 4: (Intercompany) Prevention Is the Best Medicine
Part 5: How to Reduce Risk and Ensure Controls Over Your Intercompany Transactions with Cadency’s Detective Controls
Part 6: How to Excite an Accountant During Close
Part 7: How to Measure the Impact of Your Control Environment Using a Framework for Compliance

Written by: Melissa Taylor