How to Digitize the Enterprise Cash Cycle (part 3: Reconciliation)
By Scott Campbell
Co-Founder and Head of Solutions at PayStand
April 16, 2019 — Scotts Valley, CA
Does anyone really look forward to the month-end accounting close process? Given how long it takes, it’s really hard to imagine that the answer is “yes.” Estimates on how long month-end close takes range from barely manageable to incredibly arduous:
- CFO magazine reports that of 2,300 organizations polled, the least efficient bottom quarter takes an average of 10 or more calendar days to close the books.
- A case study on Griffin Technology found that manual closing took 30 days prior to launching automating reconciliation processes.
A quick Google search for “How to reduce time spent on month-end close” yields a whopping 204 million results. Houston, we clearly have a problem.
This last post in our series on digitizing the enterprise cash cycle is dedicated to reconciliation. The way incoming payments are reconciled can drastically impact A/R staff and the business as a whole.
Consider the difference between manually keying in thousands of payments and automated workflows that take online payment information and tie it directly to the business’s enterprise resource planning (ERP) tool.
In the first scenario, the ability to keep up with manual payments rests on manpower and there’s lots of room for manual error. Any staff interruptions can throw off the delicate balance of closing the books each month. In the second scenario, payments are automatically verified against ERP records. Human interaction is required to deal only with exceptions.
So, how do you get from a manual, time-consuming process to automated workflows that shave time off of month-end close? Revisit the exercise from our previous posts on what’s happening today.
Start by enumerating all payment types and how they are currently reconciled
What you learn might surprise you. Paper check reconciliation will likely be manual – unless your business has invested in hardware that will scan checks, look for key pieces of information, and send that data to pre-mapped fields in your ERP.