Accounting is recording your company’s financial transactions, sorting them into categories and then calculating total savings, expenses etc. But in case there are some errors, duplicates or inconsistencies in the data recorded then the accounts formatted would also turn out to be wrong. This would result in managers making budget decisions based on incorrect data.
Reasons why accuracy in accounting is important:
- Accurate financial records are necessary to comply with regulations to fulfil tax laws and accounting standards.
- Managers can make informed decisions about their finances and daily business operations with accurate accounting information.
- It helps gain trust and credibility of stakeholders, customers and investors
- Inaccuracy in accounting leads to getting charged with fines, penalties etc.
- Accurate financial data helps professionals forecast more accurately and make better budget plans.
Hence, it is vital for an organization to reconcile financial records. This process refers to comparing two reports against each other to verify if the amounts recorded are correct. It helps you ensure that the data is free of errors, leading to better decision-making.
However, the process of reconciliation done manually through excel takes a lot of time and effort from the finance team. Due to the time, effort and the possibility of human errors, many organizations are switching to automation. Since the reconciliation process is exhausting and error-prone, with automation you can ensure clean data and accurate results without much effort.
How automated reconciliations help ensure accuracy in accounting:
Minimizes manual errors:
With automation, there is no need for any manual effort from the finance department. The software pulls data automatically and cleans it which eliminates manual errors
Improves accuracy of data:
The software gets rid of errors, duplicates and inconsistencies by applying logic and conditions to get accurate and error-free results
Speeds up the reconciliation process:
It reduces the time taken to reconcile transactions and multiple reports as it automatically pulls data and applies logic to generate reconciliation results
Enables real-time reconciliation:
With automated reconciliation, you can reconcile the data hourly, weekly and monthly to get updated real-time results as and when required.
Provides detailed reports:
The software generates an all-around reconciliation report with all details so that you can identify pending payments or overpaid transactions which helps avoid any losses
Enhances audit trail:
With automated reconciliation software, you get a detailed audit trail for all transactions and any changes made, which helps eliminate discrepancies while improving accountability.
An automated reconciliation software thus improves the overall efficiency and accuracy in the accounting process. As it removes errors and speeds up the reconciliation process easily. It gives a detailed view of each transaction along with a better audit trail so that you can monitor the transactions and make claims in case of overpayments. This way the efficiency in your daily accounting increases as you can avoid unnecessary losses without wasting much time in reconciliation
Cointab reconciliation is one such software that helps you maintain the accuracy and efficiency of accounting with its automated software. It automated data loading, scheduling and export to help you complete the reconciliation process much faster. It produces the report in an easy-to-understand format and alerts you of transaction mismatches with a detailed view. This way you can monitor and track all transactions to enable accuracy in accounting.