Why Your Account Reconciliations Shouldn’t Rely on Manual Spreadsheet Processes

For years, conducting financial processes, such as account reconciliations, through a combination of spreadsheets and other manual methods have been the go-to approach for finance and accounting (F&A) teams. Now, these manual methods have created inconsistent processes for solving problems. An efficient and effective solution to common mishaps caused by these methods is to establish automated workflows. The implementation of automation within your reconciliation process reduces the risk of costly errors that are inherent in spreadsheets. Here are the three reasons why your organization shouldn’t continue relying on so heavily on spreadsheets.

Why Your Organization Should Establish Automated Workflows

Reason 1: Spreadsheets are Error-Prone and Lack Scalability

When using manual methods, it’s easier to have errors, and more often than not, organizations aren’t aware of these errors until it’s too late. One reason for these errors is due to the overconfidence in repurposed spreadsheets. Even with the big risks that come with using and recycling spreadsheets, companies still use them to manage complex balance sheets.

This manual method cannot efficiently or effectively handle the growth of a company whether that’s organically or through mergers and acquisitions (M&A) activity. As companies and their revenue grow and become more complex, transaction volumes and account numbers increase as well. This is where automation comes into play as it helps keep the process organized and visible while reducing risk.

Reason 2: A Lack of Controls and Visibility Across Finance Processes

Closing at the end of the month with manual processes is possible, but the lack of visibility leads to a lack of strong internal controls. Mistakes are often not discovered and reported until after closing – meaning accountants must spend extra time finding the appropriate documentation and correcting the mistake. With no real-time visibility into all the close activities occurring across different sites, business units, or teams, those responsible for the results are unable to track the workflow, tasks and issues that are potentially disrupting the process.

Manual processes don’t include an audit trail of who changed what, when, why, and with whose approval for reconcilers, managers and auditors. This creates a significant risk of fraud or misstatement and increased audit or compliance costs.

Automation helps to resolve these challenges by granting the appropriate personnel access and visibility throughout the entire close process. If there’s a mistake, it can be flagged and corrected immediately before the process continues. Additionally, if your company needs to pull data for an audit, an automated documentation and archiving process keeps it easily accessible.

Reason 3: Manual Processes Result in the Underutilization of Finance Talent

It’s no secret that companies are automating their processes to decrease errors and risk, but did you know this is also helping them retain top talent? Accountants and other finance professionals are being consumed by the tedious nature of the month-end close, giving them little or no time to focus on other value-added activities.

Spreadsheets have limitations such as being locked to other users when someone is working on them. This results in multiple versions that must then be combined and manually reviewed which creates an increased risk of errors. Account reconciliations are often manual and prone to errors when using spreadsheets. Rather than directing resources toward value-added activities that help the company move forward, valuable time and money are consumed by managing data instead of using data for critical analysis.

Once your company has implemented automation, accountants can pursue a variety of more challenging and fulfilling projects that help make your company more competitive in the marketplace. The ability to retain top talent directly correlates to the ability to innovate in all areas of the company.

Spreadsheets aren’t viewed the way they used to be – helpful, organized, and transferable. Today, spreadsheets come with a lack of control and visibility, errors, and underutilization of finance talent within the company. They lack scalability and cannot effectively keep up with a growing organization. Automating your processes will help keep everything on track while allowing F&A teams to focus on projects that will help the company progress and grow. To explore more on account reconciliations, download the 5 Reasons Spreadsheets Are a Problem eBook.

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Written by: Isabella Delgado