The constant comparison of financial statements is tiresome and long-winded. Because of this, supplier statement reconciliation is something that is often completed only for 5-10 top suppliers, leaving unclaimed credits and overpayments that could be cash in your bank.
In this blog, we dive into common statement reconciliation problems and give tips on how to improve them.
Supplier Statement Reconciliation Issues
Time and resource constraints.
Many Accounts Payable (AP) teams are simply unable to reconcile all but a few top vendors. Time is tight, day jobs are your priority, and one person can’t be sacrificed to statement reconciliation for hours (or days!).
It’s a low priority.
As it takes up so much time and resources, statement reconciliation often gets put at the lowest point of the priority list. When someone does get to this task, there is often very little time to complete it – a spare hour at best.
Nobody wants to do supplier statement reconciliation.
Manually comparing sets of statements for hours on end is uninteresting and repetitive. Many of us would rather listen to fingernails on a chalkboard than wheel out the ruler and highlighter. As a result, no-one volunteers. The issue is that if nobody wants to do it, then who takes responsibility for its completion?
It’s a waste of time.
Not only is the process long-winded, but 95% of your time is spent comparing statement lines that match. The discrepancies, the rebates, the discounts – those are the gold nuggets that you’re spending hours sifting for. But does finding one make that wasted time worth it?
It can be difficult.
Complex suppliers cause statement reconciliation to become even more time-consuming. They could have parent or child companies, or several separate entities under one supplier name for example. This becomes especially plain if you have the same transactions on many supplier statements.
There’s a high risk of human error.
Unfortunately, manual statement reconciliation relies on individual people. Often one tired, bored person who would rather be fighting the fires that are building up (or possibly taking a well-deserved holiday). While your team may be excellent at this, no human can be 100% accurate, every time. This means overlooked issues; an extra zero here, a one mistaken for a lower-case L, a slip of the highlighter-ruler combo. So your ledgers may not be as accurate as you think.
Overcoming the pain with Automated Supplier Statement Reconciliation
Your statement reconciliation process can improve with a few simple steps.
- Create responsibility for the completion of statement reconciliation. Your team may have a person who loves to find errors and rectify them. They are the perfect person to take on responsibility for statement reconciliation. This also then makes it a higher priority for one of your team.
- Improve your invoice process first. Many issues stem from having far too many ways for a supplier to send you an invoice. Manual, email, supplier portals, e-invoices. Pick one or two options and keep vigilant with suppliers who don’t submit their invoices correctly.
- Statement reconciliation automation. Automate the element causing so many headaches; manual statement matching.
That’s where we can help, with FISCAL’s automated supplier statement reconciliation software. More on that later!
What are the benefits of automated statement matching?
There are many benefits to automating your supplier statement reconciliation process.
First, you save a huge amount of time and use it more effectively. Instead of you spending half an hour on a statement, we match it in just 7 seconds. All you need to deal with are the exceptions. Imagine you have 500 suppliers with statements that you’d like to reconcile. If each one takes half an hour, that would take 250 hours – 32 working days. It’s impossible. But automating the process makes it completely possible.
It removes the boring and repetitive part. The act of manually matching the statement is gone, turning the process into something people want to do. Now they’re tackling exceptions and improving ledger accuracy. They’re not spending several frustrating hours searching for a few errors. That means no more wasting time searching through statements for those golden nuggets that will result in more cash for your business. Your team can put the highlighters away forever.
You remove human error. Automated statement reconciliation is faster and more accurate. Our software examines your statements against the transactions in your ERP. It also makes use of historical data, learning what is usual for a supplier and flagging discrepancies and potential issues, including possible fraud.
What do you have to gain from automated supplier statement reconciliation?
You may find yourself asking, why do I need a technical solution to this problem? You’ll get all the intended results of statement reconciliation that you don’t get now. It’s that final step to ensure that your ledgers are in order, to minimise overspending, to recover lost credits and missing cash, and therefore to get the best possible value from suppliers. After all, protecting your bottom line is integral to the continued success of a company.
In our previous blog we talked about what it meant to have efficient statement reconciliation. To recap – it means you complete the process fast, at volume and at a high quality. So, what do you get out of doing that?
You’re prepared for Audits.
Completing statement reconciliation enhances accuracy and reduces errors. So next time audits roll around, you’ll be safe in the knowledge that you’ve been keeping your books in order.
You overcome time constraints.
Usually, you would complete a few statement reconciliations per month. Automation allows for much larger volumes. The time-consuming matching becomes a tiny part of a streamlined and effective process.
Enhancing accuracy and reducing errors.
Precise algorithms identify discrepancies on your behalf, removing human error. You miss fewer statement issues as a result.
Identify credit notes, rebates, duplications and more.
As with any statement reconciliation, a huge benefit is the amount of cash you can identify. You could discover discounts or credit notes to apply, or overpayments to recover.
Fewer supplier queries and better supplier relationships.
Matching supplier statements more often maintains a constant stream of supplier contact. Your supplier will appreciate that you keep them in the loop if there are any issues. Keeping your books in better order also results in fewer supplier queries, saving staff time.
Conclusion
Automation can turn what was a low-priority task that everyone avoids into a simple routine. The question is, when will you automate your statement reconciliation process?
Did you know that FISCAL offers an automated statement reconciliation solution?
FISCAL’s highly accurate software facilitates fast, automated statement matching. It compares your statements against thousands of data points for fast, accurate discrepancy detection.
Our experts support you through your journey, from initial consultation to full implementation and support.
