An article from the employment website, indeed.com simplifies the bank reconciliation process into the following steps:
- Get bank records
- Gather your business records
- Find a place to start
- Go over your bank deposits and withdrawals
- Check the income and expenses in your books
- Adjust the bank statements
- Adjust the cash balance
- Compare the end balances
Why is bank reconciliation so important to your business
The lack of a robust bank reconciliation process can lead to significant errors in financial statements. Reconciliation helps provide confidence in the accounts and avoid discrepancies at tax time and during audits.
It also helps you ensure you have an accurate view of how much money is coming in and going out of your bank account to help you implement cost-saving measures or pull strategic levers to drive growth. It also highlights errors so you can find out what caused them and ensure they don't happen again.
Reconciliation, reinvented: How to get spend visibility, accountability, and control
If you're a CFO or finance leader at an SMB, then you're probably not managing reconciliations alone. You may have even increased headcount specifically to support the manual processes involved in reconciling, like tracking payments and chasing receipts. But even with a team around you, keeping up with the process and closing your month on time can be challenging.
You (and your finance team) may also be frustrated by the amount of manual admin work involved in reconciling and the lack of non-finance accountability over spend. You're probably also concerned that the team of highly skilled finance professionals you hired spends most of their time chasing receipts and entering data.
That's where a spend management solution, including expense management software, corporate Visa cards, and many automated features, can help. It can help you digitally capture your transactions (no data entry!), categorise them, and assign them to their appropriate accounts and categories. And it can help you forecast your cash flow so that you can ensure it stays healthy.
One challenge is that many SMBs use separate systems for expense management and card spend, which means they have to manually compare their expense reports or track their transactions from multiple platforms. This process is time-consuming, frustrating, and not something you want when trying to hit a deadline and avoid errors.
London-based arts fabrication company MDM Props knew this challenge all too well as they used disconnected company cards, expense management tools, and accounting software. When they switched to Payhawk for their cards and expenses — and one-click Sage integration, they reported time-savings on card reconciliations of over 32 hours a week.
While fund-manager-insight scaleup, Essentia Analytics, reported saving five days at the month-end close after moving to Payhawk. Adding that Payhawk’s integration with Xero is the best they’ve seen, allowing them to export their info in just a click.
How Payhawk can help
Payhawk gives you increased control and efficiency over all aspects of your business expenses. From data capture via the optical character recognition (OCR) to streamlined accounting software integrations with companies like quickbooks.
The Payhawk app leverages sophisticated OCR technology to automatically read and digitise receipts, allowing businesses to eliminate manual entry while capturing essential details such as transaction amount and item description. This feature is great for the finance team as the accountability lies with the cardholder when they spend.
For example, the cardholder makes a purchase for work using their Payhawk card. They then take a photo of the receipt and upload it to the app in seconds, remembering to choose a category (from a selection that has been preset by their manager in collaboration with the finance team) as they do so. The cardholders are happy as it's so easy to use; there's no pressure to carry around and save paper receipts, and the spend has slotted neatly into their budget or project spend.
The finance team is even happier as the cardholders have been accountable for the spend, and there's no more guesswork when it comes to closing the month or reporting in financial statements or tax filings. Moreover, they can see all the spending happening in real-time and quickly update the expense management software if they need to introduce stricter card controls, for example.
You and your finance colleagues can also focus on making strategic business decisions and pinpointing savings opportunities instead of chasing missing receipts, as the Payhawk solution automates this, so you don't have to.
Your next steps?
For businesses that are scaling up, keeping track of expenses is an important part of good record-keeping and razor-sharp cash flow management. Choosing the right spend management solution to support your overall bank reconciliation process is vital.
Learn how you can streamline your reconciliation process with our smart card and expense management solution. Book a demo today.