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How Do Accounts Reconciliation Software Help Establish Internal Control?
by Whiz Consulting Accounting and Bookkeeping Service
The accounting and bookkeeping of a firm lay down the foundation for future growth planning and guidance. However, inefficiency in these processes can adversely impact the functioning of the business. These inefficiencies can result from errors, omissions, or frauds that may go unnoticed in manual reconciliation. Such a situation can cause deviation in the actual performance from the expected results. Herein, an accounts reconciliation software can help strengthen the established internal controls and streamline the workflow.
What is accounts reconciliation?
Accounts reconciliation allows businesses to detect any discrepancies in the statements prepared by the firm with bank records. Depending on its needs, it empowers the company to manually implement a robust internal control procedure or accounts reconciliation software. Since the nature of this process is to detect mistakes, it ensures the accuracy of reports.
How does reconciliation work?
The process begins at the end of a period when the accountant makes entries and receives bank statements. To verify their authenticity, they match the data in the general ledger and other internal statements with bank statements. There can be differences that reflect omitted entries, errors in invoice processing services, etc. Additional documentation validates the accuracy and completeness of the entries recorded in the books. It helps firms discover internal discrepancies and their impact on the financial position.
Problems in manual reconciliation:
Even though reconciliation is an ultimate tool to check the internal accounting department, reconciliation errors can add to business woes. Manual reconciliation has many rooms for human mistakes. Accuracy can suffer in the hands of a scammer who manipulates the numbers for his good. It may take considerable time and losses for the company to detect fraud caused by internal cogs in the machine.
Importance of accounts reconciliation software
Error detection:
An influential accounts reconciliation software detects errors as soon as the data gets entered. You do not have to wait for the period to end to catch any mistakes. You can take the correct action frequently to avoid inefficiency. Since the process is tight-knit, scammers will have to think again to commit such heinous activity.
Preventing errors by the administration:
Administration errors include missing documents, duplicate data, etc. You do not have to send the emails back and forth to hold somebody accountable for these discrepancies. An accounts reconciliation software enables companies to prevent such mistakes from happening in the infancy stage itself. You can focus your energy on better opportunities without the burden of reconciliation.
Cost and time saving:
The reconciliation process takes considerable time to prepare, analyze, and finish. It adds to the cost of the company in several ways. Also, the accountants who spend their time on this process cannot focus on any other growth aspect of the firm. But with accounts reconciliation software, they minimize their expenses and reduce any chance of human errors.
Supporting voluminous transactions:
In manual reconciliation, you have to put significant efforts into handling the voluminous transactions that hit your business. You require employee backup and resources to meet these needs. However, using software, you can take any amount of data with ease.
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About Whiz Consulting 
Accounting and Bookkeeping Service
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Created on Nov 15th 2021 01:48. Viewed 272 times.
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