4 Tips To Automate Reconciliation
Kathy Scott, accounting manager for Truliant Federal Credit Union, has picked up more than a few best practices from the credit union’s deployment of an automated reconciliation solution. Here are four tips that apply to any business process transformation that mixes people and software:
Involve the staff from the beginning. At Truliant, the people responsible for the manual reconciliations helped develop and deploy the automated processes.
Dedicate an IT staffer. Scott says having a dedicated IT person involved made it easier to write the reconciliations into the system.
Attend forums and network with peers. There’s a lot of value in seeing best practices that emerge from what others have learned.
Don’t give up on the system. “You’ll create efficiencies if you stick with it and go through the adoption process,” Scott says.
Today, a web-based reconciliation solution takes care of all but a handful of irregularities, freeing up so much time from hands-on work that two of the organization’s nine accounting staff were able to move into other areas of the finance department.
“I like pointing that out to our managers, that we were able to give them a couple employees back,” says accounting manager Kathy Scott.
The web-based Frontier Reconciliation solution from Fiserv matches transactions using a configurable rules engine that checks large quantities of financial data for accuracy against anticipated results, turning a reconciliation process that took several hours in the past to minutes today.
“In the past, we might not have been able to look at every exception and reconciliation,” Scott says. “Now we’re able to catch out-of-balance exceptions on a daily basis and in summary form. Our unknown out-of-balances are now obsolete. That’s helped us both decrease our operational risk and increase efficiency.”
Scott says the credit union is still manually conducting some reconciliation types — including corporate on-us checking accounts, mortgages, collections, and credit cards — because of the time it takes to add them into the system. However, the credit union is working to reduce those instances.
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“We’re well on our way to having half of our reconciliations in the Frontier system,” the accounting manager says.
SEG-based Truliant serves 1,100 organizations in the Carolinas and Virginia through a network of 37 branches and its digital presence. Transactions by the cooperative’s 234,000 members encounter processing glitches and hiccups around the clock, including 300,000 to 400,000 a day through the Visa DPS debit channel and ATMs alone. Others occur in shared branch transactions and the array of cash accounts offered and managed by the big cooperative.
“We have a variety of reconciliations to work with because of the kinds of transactions going in and out of our general ledgers,” says Scott, a 20-year Truliant employee who became accounting manager in 2015.
Kathy Scott, Accounting Manager, Truliant FCU
Even after a core conversion in 2011, Scott and her staff manually reconciled ledgers. They primarily used Microsoft Access and Monarch data mining tools to record their work in Excel and created mounds of paper records the credit union had to store for seven years.
Now, Truliant stores the records off-site and the list of individual exceptions it has automated continues to grow. The credit union has tripled the number of automated reconciliations in the past three years to 79. Plans are to do 31 more by 2019, including new areas such as on-us corporate checking account exceptions.
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Most exceptions are routinely explained, such as a momentary hiccup that puts transactions into “put and forward” situations where they are either not hitting the general ledger at all or are being recorded twice.
But for those that aren’t, and even those that are, built-in reporting enables Scott and her team to provide managers and auditors with more complete and consistent information, improving transparency and reducing deficiency findings in internal audits.
Along with the efficiencies that come with thousands of excepted transactions automatically resolved and completed, Truliant managers are also now better able to mitigate and understand systemic risk through rules-driven identification and escalation paths coupled with detailed analysis of exposure.
The web-based system uses standard compliance frameworks and the credit union’s own requirements to do automated, audited reviews and approval processes for account certification.
“I would say one of our biggest accomplishments this year is that by using the certification module we now risk-rank our reconciliations accordingly,” Scott says.
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