Opening Opportunity Through Automating Statement Reconciliation
by Nick Peplow, Financial Services Director at Liberata
For companies dealing with high volumes of suppliers, goods, and services on a regular basis, busy accounts payable departments have a never-ending treadmill of tasks to complete. This is particularly the case when key details of purchase orders and ledgers are spread across multiple sites and disparate systems. As individual orders build up into vast numbers of transactions every month, supplier statement reconciliations rarely make it to the top of a company’s to-do list, which can cause a cascading set of problems to the business ultimately hitting the bottom line. Teams freed up from mundane manual tasks can also begin to contribute to the organisation’s goals in a much more valuable manner. The most interesting part is that automation doesn’t have to be a complex process, and there are solutions to fit every scale and budget.
Reconciliation is a fundamental accounting process that ensures the actual money spent or earned accurately matches the money leaving or entering an account at the end of a fiscal period. When applied to suppliers, it means that the services or goods provided for are billed and paid for accurately and on time. Reconciliation is a critical part of the finance department’s operations as it is an opportunity to check for fraudulent activity and to prevent financial statement errors. Usually, reconciliation is performed at set intervals, monthly or quarterly, and is key to managing cash flow, and ensuring regulatory compliance. However, due to its somewhat mundane nature, it’s one of the first scheduled tasks to fall down the list of priorities during busy times.
Manual reconciliation is a process prone to error
Reconciliation of supplier statements is not a complicated process, but when undertaken manually it tends to be time-consuming and prone to error. This is particularly true for companies that have a high-volume of suppliers, goods and services, which often leaves finance teams in a never-ending reconciliation loop. Complications are amplified when details of purchase orders are split across sites or even on different systems and platforms. In the worst case, invoices are physically printed out from one system and typed into an adjacent system before they can be matched. As well as being slow, resource intensive and wasteful, tasks undertaken in this manner are generally unpleasant to undertake. For these reasons, manual reconciliations are often put off until complaints arise that make their swift completion critical. Teams that are compelled to rush through mountains of paperwork tend to accumulate errors which then require even more time to reconcile. As reconciliation is pushed back to a perpetual last-minute panic, suppliers are often late to receive payments which can impact on delivery schedules.
It can also be the case that during the reconciliation process issues arise that require input from external suppliers. Invoices can be missing, justifications for payments may need to be sought from within the business, in fact there are any number of problems that can arise from a late reconciliation report. Discrepancies unearthed in this way impact and disrupt not only internal workflows, but also impact on supplier workflows, especially if undertaken in an ad hoc and unstructured manner. In the long term this can affect pricing strategies or preferential terms, potentially leading to an increase in coverall costs to the business.
Reconciliation is also a lengthy and tedious task. Often it may even be performed by temporary staff unfamiliar with the systems, services and suppliers who they are administering – yet another reason why mistakes creep in. Staff are only human, after all, and even 99% efficiency means that 1 in 100 reconciliations will have an error of some order of magnitude.
The solution is automation, and it’s not rocket science
While reconciliation is not a complex process, failure to undertake it in a systematic process often leads to complex and undesirable outcomes. The key to solving these issues is through automation.,. When automation is applied to the problem, not only are results achieved on time, more economically and with greater accuracy, automation provides an array of analytics that can deliver real insights into how suppliers are performing. These insights can be shared across the organisation and assist with cohesive planning initiatives and help to deliver better business outcomes. As cloud technology evolves and more streamlined processes become available in the workplace, increasing numbers of businesses are taking advantage of automated reconciliation services, and discovering the benefits of adopting this approach.
Reimagining finance within the organisation
Part of the problem of automating tasks is envisioning what staff will do with the time saved from undertaking them. Automation implies that repetitive and mundane tasks are removed from the job stack, meaning that managers are forced to reinterpret the roles of their team members. Most finance departments are overworked and there are plenty of other tasks that require attention. However, for progressive managers and organisations, automating away the mundane can lead to a step change in how their department integrates with the wider organisation. With more time to focus on the bigger picture, finance heads can use the technology and data analysis they possess to provide better information and insights to other departments. As well as contributing to strategic and operational decisions, finance can play a greater role in ensuring that all departments are working together towards the organisation’s shared goals. For example, team members, free from mundane data entry, could be spending more time benchmarking suppliers and providing next-best alternative solutions, assisting the commercial teams to enforce best practice in purchasing and proactively helping to navigate the pitfalls of the supplier selection process.
Accounts payable team members possess valuable skills. Removing them from a time-consuming process, where errors are almost guaranteed, and allowing them to work on more complex tasks, such as improving supplier relationships, analysing delivery schedules, working cross functionally with other departments is ultimately a much more valuable undertaking to the business, and automation plays a key role in achieving this.
How to identify the signs that your IT department need restructuring
Eric Lefebvre, Chief Technology Officer at Sovos
For firms to execute transformations and meet their overall vision, it is crucial that their CIOs are able to recognise the signs that their department is in need of some internal change. In the current economic climate, CIOs working to fulfil their organisation’s priorities and meet business goals might hesitate to acknowledge that their IT department needs restructuring, never mind be able to identify the signs.
However, these problems rarely fix themselves and organisational restructuring requires conviction and determination from leadership for it to occur successfully. So, what are some of the key signs that CIOs should look out for?
Struggling to keep up with industry demands
CIOs unsurprisingly are working in an extremely demanding environment at the moment. Meeting these evolving demands is crucial for companies. When demands are not met and not handled properly, this can have a lasting impact on organisational goals and objectives, and even impact the way in which transformations are put into effect.
Depending on the organisation’s structure, the way in which being unable to keep up with demands manifests itself can differ. Despite double digit reductions across the industry, the search for talent across the tech world continues, project costs continue to rise as the cost of labour has increased and schedules have been disrupted by significant attrition. Many companies will also find business costs, such as that of third-party software, are higher than planned and technology debt continues to pile up faster than it can be sunset.
Whilst leadership teams might dedicate their department’s attention on the factors discussed above, they may find that their team will fall short when it comes to timely deliverables and helping maintain your organisation’s tech stack and guide its business transformations. Looking beyond the immediate problems of high costs and considering an internal reshuffle may be the solution for many IT departments.
Internal conflict within the team
Organisational designs with underlying issues can cause constant friction, especially when they go unacknowledged. An IT department that lives in conflict will certainly be reflected in results and less than successful tech transformations. CIOs will find that by adopting an organisational design which works through staffing issues, will better innovate, especially if they can all work together.
Department leads should have a strong understanding of their team’s work environment and guide them through any long-term or potential problems. When an individual is working in a demanding or complex industry, working well with your team shouldn’t be the main impediment to innovation. By acting quickly to eliminate internal conflict, CIOs can better lead and ensure their team’s focus is entirely on producing more optimal outcomes.
Delays are commonplace
When a large amount of your team’s time is spent setting objectives, budgets and timelines for the projects they are working on, it is vital that they are met. When delays are coming from the IT department, they will inevitably hinder the development of any business transformation, especially if it prompts teams to spend excessive amounts of time rearranging budgets and timelines and therefore hindering innovation.
IT departments are a crucial aspect in many different parts of a company’s transformations, so remaining on track when it comes to timelines and innovation is critical to operational plans. If delays have become commonplace in an IT team, and external factors are impacting projects, CIOs should look at restructuring an IT department to solve these issues.
The strongest team relationships do not happen by accident and are the result of good planning, strong leadership and a motivated team. CIOs can ensure this by providing vision and long-term strategy with clear goals and objectives to produce high levels of quality output.
When internal issues are noticed in an IT department, and are noticeably impacting team morale or productivity, this should indicate the need for departmental restructuring. Be that due to an inability to meet market demands, issues with productivity and meeting deadlines or internal conflict, these issues all risk a department’s functionality and an organisation’s ability to achieve its goals. In short, don’t overlook the warning signs!
Top banking trends of 2023 and global outlook of banking and fintech for the year ahead
Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School
You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:
Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.
Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.
Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.
Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.
Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.
The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.
Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.
The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.
I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.
Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.
Efficient Ways Construction Firms Can Bring Down Costs In 2023
Consistent, high-quality construction projects being underway is often a sign of a thriving economy. The future of the US is...
How to identify the signs that your IT department need restructuring
Eric Lefebvre, Chief Technology Officer at Sovos For firms to execute transformations and meet their overall vision, it is...
Top banking trends of 2023 and global outlook of banking and fintech for the year ahead
Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School You’d be forgiven for assuming that the...
Sustainable transformation in the energy sector: econnext AG focuses on scale-ups
Scale-ups rather than start-ups: scaling market-ready technologies and companies for a sustainable transformation of the energy and technology sectors Profitable...
Budgeting the unknown, forecasting the uncertain
Tarka Duhalde, Vice President, Financial Controller, IRIS Software Group Volatility and uncertainty are still looming large. In late March...
Building resilience: How to create stability during uncertain times.
Jim Wilkinson, CEO of Zuto We live in uncertain times. Businesses have faced one challenge after another, and we’ve...
The need for simpler cross-border payments must be a priority for all banks
Mushegh Tovmasyan – Founder of Zenus Bank Despite the transformative changes we have seen in the banking sector over...
How app usage can help brands increase their online revenues and customer retention
Arunabh Madhur, Regional VP & Head Business EMEA at SHAREit Group Brands are continuing to invest heavily in the...
Will ‘Britcoin’ change the way we bank?
The Treasury and Bank of England recently announced a state-backed digital pound is likely to be launched in the UK...
In-Store, Online & In-App – Unifying Payment Authentication
Michel Roig, President of Payment and Access, Fingerprints Often, new technologies are lauded as the death of existing ones....
Why the future is phygital
By Eric Megret-Dorne, Head of Card Issuance Services and Service Operations at Giesecke + Devrient Digital banking has become...
Why Keeping Track of Cash Is Key to Economic Survival
By Joshua May, Consulting Manager EMEA, BlackLine Finance and Accounting (F&A) has always had a reputation for its calm...
Does the middle market have a financial edge?
Ilija Ugrinic, Commercial Solutions Director at Proactis Companies tend to look up the ladder when searching for ways to...
Hybrid Intelligence – The only way to face the problems of the future
Author: Prof. Dr. Iris Lorscheid, Vice-Rector Research and Professor of Digital Business and Data Science Computer Science at the University...
Consumer demand driving sustainable payments
Jenn Markey, VP Payments & Identity, Entrust Sustainability is a buzzword that seems to be at the forefront of...
Adyen drives conversion uplift with advanced authentication solution
The company’s expanded authentication offering optimizes authorization, security, and end revenue Adyen (AMS: ADYEN), the global financial technology platform...
It’s time for financial institutions to take personalization seriously
David Hetling, Global Marketing Director, Financial Services, RWS Financial institutions will always play a critical role in society, offering...
The Future of Capital Markets: Democratisation of Retail Investing
Nicky Maan, CEO of Spectrum Markets Over the past decades, global capital markets have undergone tremendous changes. There have...
5 Often-Overlooked Investment Options To Consider Exploring In 2023
When choosing what to invest in, many people will initially focus on the stock market which is considered a more...
New Open Banking platform Archie waves a timely hello to Britain’s beleaguered businesses
Archie is a game-changing payments and data platform that’s inherently human in its approach; a refreshing proposition in the jargon-heavy...