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Lessen the Burden of Accounts Reconciliation. Start Outsourcing
Accounting is all about precision, accuracy and reconciliation and any business has to get this right for exponential growth, free of such encumbrances as un-reconciled accounts and fraudulent transactions. Invariably, reconciliation and balancing of all heads of accounts are at the very foundation of the double entry bookkeeping system where any head of the account has to be set off against another.
But there are two aspects to it – reconciliations per se to get a reality check on the actual financial standing of the company and even if it is truly reconciled, to know whether it has the sanction of authorized personnel. So systematic is the process that the smallest lacunae in balancing of heads can at once be traced at the time of reconciliation of accounts. Given its importance, there is always a need to have accounts reconciled at regular monthly intervals. Not doing so can have disastrous consequences for any company.
An example of bank reconciliation will prove this point. This is a process that sets off items in a bank statement against those in the cashbooks of the company. Why are there discrepancies between the two? A check received by you as payment for services rendered will be entered in cash but sent to the bank for clearance after a few days.
For that period your books will show inflated cash on hand. If you go by it and draw checks for payments to vendors who present it to your bank immediately, you’ll be in trouble since there is no balance to cover it. The balance you see in cash books is only notional and not actual. Hence bank reconciliation at regular intervals is required to have a clear position of the financial standing of your business.
The example given above is as simple as it can possibly get. In reality, accounts reconciliation is a very complex and tedious task. Consider the same scenario with hundreds of items that have to be matched against each other and you’ll get an idea about the enormity of the task. Doing it in-house will entail engaging manpower and installing highly expensive hardware and software, all of which can all be avoided if you choose to outsource accounts reconciliation.
How then can you lessen the burden on yourself by choosing to outsource
Free up time to focus on core competencies – From what has been seen so far it is obvious that if you take up in-house reconciliation of accounts and have to track and monitor different entries, you or your company will have little time for anything else. By choosing to outsource you can concentrate on core activities and take your business to the next level.
Outsourcing agencies take up accounts reconciliation comprehensively so at any point of time you know the financial state of your business with updated reports to back it up. And you can also be very sure that the picture you’ll get will be accurate in all respects.
Ensure accuracy under all heads – Accounts reconciliation is simply not a process that matches general ledger Cash with the amount in the Bank; it takes along all other heads of accounts too. How is this possible? You issue a check to cleaning services by debiting you P/L Maintenance Head and crediting cash. The servicing company deposits the check after a period of time and it is cleared by your bank.
Now note, that by simply completing bank reconciliation activity for that month you also make sure that the specific head of P/L is also in order and accurate. Hence when you outsource accounts reconciliation broadly, most complementary heads of accounts will also be balanced by them.
Closely monitor your financials – One of the factors that weigh on the minds of any businessman is how true his records are and whether they are clean in all respects. This burden can only be lessened if the reconciliation of accounts is done promptly.
Cash ledger is your internal record and that has to be matched with bank statement which is maintained by an external institution. Once these two are balanced you can be sure about the authenticity of your accounts and reports generated. Any policy decision that you may take based on data and updated reports provided by outsourced agencies are therefore deemed to be exact and reliable.
Reduced documentation and paperwork – The bane of any business is the huge paperwork and documentation that has to be dealt with and processed at all levels in the accounts department. It is actually a burden and consumes man hours that can easily be better deployed in more productive activities.
When you outsource accounts reconciliation the agency will match all invoices and documents both in paper and electronic form while arriving at the final figures. This one aspect if taken off your daily activity routine can work wonders by increasing business efficiencies.
It can, therefore, be said that outsourcing the process of accounts reconciliation is not only a wise business decision, by any standards, it will also be a smart business decision too.
If you are wondering which direction to take for outsourcing accounts reconciliation, get in touch with Cogneesol. We are industry leaders in accounts reconciliation with highly trained manpower and latest technology to optimize the process. To know more, contact us at +1-646-688-2821 or write to firstname.lastname@example.org.
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