24 Jan 2023
4 min read

Save your SMB 30+ hours a week with fast, accurate bank reconciliations

Trish Toovey - Content Director at Payhawk - The financial system of tomorrowTrish Toovey
An employee working with Payhawk's automated bank reconciliation software to check current balances at her SMB
Quick summary

Every step in your business bank reconciliation process is essential, from chasing and gathering receipts to comparing your end balances. Of course, at growing small and medium-sized businesses (SMBs), it takes a lot of work to record every inch of data accurately, especially when teams are sharing company cards, paying with personal funds, and more.

Table of Contents

    It's close to the end of the month, and you're trying to close the books on time. But... you've just found some discrepancies in your balance sheet, some missing receipts to support your recent business payments, and, worse still, a lack of visibility over who made the payments in the first place. The lost receipts (and ownership) mean hours of chasing and investigation ahead of you and your team, and you'll never close on time.

    Sound familiar?

    Understanding bank reconciliation

    If you've ever had to reconcile your company spend when there are big gaps in your information, you know that there are few things more frustrating than figuring out where your money went. The process is tedious and time-consuming. And it can take days to manually gather all your receipts to match them with every transaction, especially if your colleagues have been sharing one company card.

    HBR report: how to drive business strategy and growth

    An article from the employment website, indeed.com simplifies the bank reconciliation process into the following steps:

    1. Get bank records
    2. Gather your business records
    3. Find a place to start
    4. Go over your bank deposits and withdrawals
    5. Check the income and expenses in your books
    6. Adjust the bank statements
    7. Adjust the cash balance
    8. Compare the end balances

    Why is bank reconciliation so important to your business

    The lack of a robust bank reconciliation software 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.

    Real-time reconciliation explained

    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 to streamline your reconciliation process with our smart card and expense management solution. Book a demo today.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →

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