Reconciliation of your ERP with Bank of your Choice
Ask any Certified Public Accountant, which procedures in his line of work are the most time-consuming and prone to error. You'll almost surely hear that bank reconciliation is one of an accountant's most tedious responsibilities, along with manual data entry and processing checks. The term 'bank reconciliation' is generally understood by everyone. The task of bank reconciliation is to compare the information on a bank statement with the information recorded in the accounting records of a company.

Consider the situation in which the bank reconciliation was automated in a software system where you had to fill out receipts and payment vouchers and all the data was automatically recorded in the ERP software system without the need for someone to manually maintain the company's statement of transactions. Isn't it a great alternative for manual error-prone entries in the bank reconciliation process? In this blog, we will discuss the ERP, why it is crucial for the banking sector and how we can automate the reconciliation with the ERP.

What is ERP?

Many sectors employ ERP software, but the banking sector relies heavily on this financial management software to achieve efficient processes. The banking system is extensive and complex; it faces several operational difficulties and problems, manages vast amounts of data, and faces security issues connected to maintaining confidentiality. It also needs to adhere to many industry laws. In this situation, ERP is a wonderful way to take advantage of all banking activities, including managing accounts, and financial reports, processing payments, keeping track of cash, and managing security.

So, we can formally define the ERP as the software that automates the tedious tasks of the banks and makes it easier to carry out the error-prone tasks more accurately. Such automation maintains a close relationship between book balance (the amount an organization retains in its books) and bank balance (the amount a bank claims to have on file for an organization). These cover a wide range of functions such as accounting, supply chain management, project management, risk management, and much more. A company's financial results can be reported using an ERP system. It connects all the data, clients, suppliers, and procedures to produce better outcomes and a more efficient workflow.

All Financial Procedures integrated into One System

ERP is a centralized platform where the main banking processes may be managed and tracked round-the-clock. All branches and departments can easily connect banking procedures and streamline information. Data entry and report production are examples of repetitive jobs that can all be automated. Consequently, valuable resources can be made available so that they can be used in more critical areas.

Reduced costs for IT

The IT expenditure of the banks will decrease significantly if you switch from a legacy system to a cloud-based ERP with automated functionalities. Because there are lower upfront expenditures than with other systems, the Total Cost of Ownership (TCO) is lower.

Reconcile ERP with the Bank of your Choice

Studies mention that managing transaction-intensive processes consumes up to 59% of the resources in the finance department. You may easily extract the data from your bank accounts and submit it to the accounting software using auto-reconciliation. You only need to check that the data is uploaded correctly as this current process is password protected. The time-consuming chore of manually reconciling financial data onto an Excel sheet, or even using paper and a pen, is greatly reduced by using this method. Instead, auto-reconciliation will compare cash expenditures and revenues to your financial records to produce cash flow, income, and capital statements automatically.

Recording the transactions

The financial transactions between the ERP system and all of the transactions recorded into bank accounts are mapped in the auto bank reconciliation feature of the ERP system. It serves as the main component of the bank reconciliation because it informs the company of the actual amount that is currently in their account rather than reflecting the amount that will be there after upcoming transactions that are being started from the ERP system but not yet processed to the bank accounts. Knowing what produced the difference in the balances, if any, is the goal of bank reconciliation.

Balance Between Bank Accounts and Company’s Accounts

The ERP system maintains a fair balance between the company's accounts and the bank account, which helps to tenfold the performance of the firm. The ability of the firm to use the money that is currently in the account before it is deposited into the bank is the ERP's most notable feature. In essence, it aids the company in keeping a clean slate, which is important for keeping track of the numerous daily transactions between various organizations.

Track the Transactions

An organization is charged when a bank account goes into overdraft to make up for the shortfall. Every organization will make every effort to stay away from this circumstance because it is unprofitable for them. ERP aids in maintaining a record of the volume of transactions and their total dollar value, together with their precise time and date. By highlighting the discrepancy between the bank reconciliation statement and illegal transactions as well as the real amount that was in the account on the requested date, it protects the company from any potential fraud.

Advantages of using ERPs for Reconciliation:

1. Reduced Chances of Fraud: Quick, precise financial records allow you to spot any discrepancies that necessitate further investigation. Compliance with anti-fraud laws will benefit from improved financial records.

2. Time-saving procedure: The procedure of auto-reconciliation is substantially faster than manual reconciliation. Instead of manually entering each item of data from many sources, it can analyze the data and produce reports to be evaluated.

3. Reliable book-keeping: Auto-reconciliation will guarantee that every account history is documented and provides documentation that is error-free and correct throughout. You will have a detailed record of everything that was done when it was done, and by whom.

Conclusion: The Bank reconciliation feature of ePROMIS ERP enables you to make critical financial choices while considering upcoming payments and receipts. Any organization's most susceptible asset is its finances, and Bank Reconciliation feature of the ERP will help you find abnormalities in numerous transactions and secure the organization's most important resource.