Imagine the end of the month at a thriving company. Salespeople are partying because of an all-time high. Operations are running a very efficient process through a booming supply chain. And what about the finance team? You hear only the clickety-clack of keyboards since they’re knee-deep in reconciling everything manually, the bank statement to invoice, point of sale to general ledger, and credit card batches to merchant deposits. Most business owners consider this a “simple accounting issue.” This is a very misleading myth. Reconciling information manually is not just an accounting issue; it’s the key bottleneck that prevents you from growing your business. Missing Automated reconciliation arises following problems:
High-Value Talent Being Mismatched
Consider the talent that you have in your finance department. You have analysts, controllers, and strategists. However, when you force them to reconcile information manually between different systems like matching retail platform to QuickBooks or an ERP, you transform them into very expensive data-entry specialists.
Each hour that your finance team spends chasing down a 12-cent difference in a credit card batch is an hour that could be spent developing your pricing strategy, analysing margins, and uncovering new sources of income. As the volume of your transaction’s increases, so does the cost of reconciliation in direct proportion. Eventually, there is a point at which your team is no longer capable of producing the insights necessary to grow due to the limitations of its capacity. You are not just losing time; you are throwing away your most valuable resource.
Delayed visibility can be dangerous
Growing requires fuel and, in business, that fuel comes in the form of cash. In a manual process of reconciliation, delay is inevitable. With the ten-day time it takes to reconcile the past month’s books, you base all your decisions on whether to hire new employees, enter a new market or make another kind of investment on the information that is hopelessly outdated by then.
In today’s fast moving business environment, to be operating with such a lag is to drive along the highway looking through the rear-view mirror only.
The “Bad Data” Trap
Human error is an inevitable part of manual systems. Typos, forgotten rows, and double entries not only make an accountant’s life difficult; they contaminate the very bedrock of your business intelligence.
Your revenues will be incorrect if your books are out of whack. Growth tactics based on bad data are basically a gamble. You could expand a campaign that was losing you money, all because manual books obscured your actual unit economics.
Organizational Friction
Lastly, manual reconciliation generates friction that destroys organizations. Salespeople want to close deals and get their money quickly. However, when the finance team is busy with manual reconciliations, they become “the Department of No,” as they delay the commission payment or the approval of new vendors because they doubt the numbers. Consequently, there emerges a gap between these two departments that slows down the work of the whole organization.
The Bottom Line
For any business to grow, it needs to consider automated data transfer as essential infrastructure. Automated reconciliation, which includes creating a connection between different systems, so that transactions correspond and are posted automatically, is not only an effective tool for making the accounting team’s life easier.
Automated reconciliation means empowering your financial team to be strategic advisors. It means gaining real-time visibility into your cash flows and making decisions with confidence. And it means that each of your growth decisions will be based on absolute truths. Stop considering manual reconciliation an inevitable process. Realize that manual reconciliation is a hidden tax on your business.
