Reconciliation of your ERP with Bank of your choice

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Blog posted by : Admin / 30 Jul, 2019

Reconciliation of your ERP with a bank of your choice


You all might be aware of the term “Bank reconciliation” and how this process works brilliantly, especially in large scale organization. The process of bank reconciliation involves matching the record of an entity’s accounting transactions to the corresponding information on a bank statement. This standard process helps in tracing any missed entries or frauds occurred due to manual intervention. But what if the bank reconciliation goes automatic in a software system wherein you have to fill in receipt and payment vouchers, and all the information is automatically recorded in ERP software system without a person having to maintain company’s statement of transactions manually. Such automation keeps close ties between book balance (the figure which organization keeps in its book) and bank balance (the figure that bank says exist in account of an organization.

How Auto Bank Reconciliation Works

Auto Bank reconciliation in ERP system works by mapping the financial transactions between the ERP system and all the transaction recorded into bank accounts. It is the primary feature of the bank reconciliation as it makes the business aware of the actual amount that is currently present in their account rather than reflecting the amount that will be present after future transactions that are being initiated from ERP system but not further processed to the bank accounts. The point of Bank reconciliation is to know what caused the difference in their balances if there is any. 

ERP system keeps a fair balance between bank account and company’s accounts which helps to improve the performance of the business by ten folds.

This is the most prominent feature of the ERP as the business we can make use of the currently available amount in the account before it is being deposited to the bank. Basically, it helps the business to maintain a clear date, which plays a significant role in maintaining the vast transaction records between different businesses on a daily basis.

When a bank account is overdrawn, to compensate for the difference, the bank account charges the organization. Every organization will try to avoid this situation as much as possible because it is a no-profit situation for the organization. ERP helps to keep the track on the number of transactions and the total amount that is being transacted with its exact time and date. It prevents the business from any potential frauds by displaying the difference in bank reconciliation statement and illegal transactions as it shows the actual amount present in the account in demanded date. 

Benefits of the Auto Bank Reconciliation

Bank reconciliation is an excellent ERP system that helps the business to keep a watch over transactions, along with maintaining countless transactions of finance among different companies. It reduces hecticness by eliminating the process of frequent entry of transactions in the ERP system manually. This tool is mostly needed in the place of mismatch between the ERP system and the bank accounts. It saves money as well as reduces manpower because, with the help of ERP system, multiple transaction entries can be done within a click. There are chances of zero manual error as there is no human intervention required during the transaction. The major benefits of ERP software are as follows:

1. Auto creation of ERP payment voucher : 

You only have to provide the ERP system with your basic information like company name, ledger name and bank details along with date and time and ERP will spoon-feed you the auto-generated payment voucher in the two most accessible format (CSV and Excel) that can be quickly and most easily processed according to the requirements to make a particular transaction. The easiest way to generate the voucher and process it further for the transaction is the only motive of this feature of the Auto Bank Reconciliation.

2. Zero manual errors:

Zero manual entry means zero manual error. As the entries of the transaction are auto-filled into ERP system, there is no risk of any calculation or mathematical mistakes such as transposing two numbers or recording a transaction twice, or be more serious, such as forgetting a transaction. As recording of the transaction in ERP system manually can also be the reason for manual error. Basically, no manual intervention is required in the process.

There are more chances of error in the place where there is some involvement of mathematical calculations. Manual comparison can also be wrong in a way that the records are right in ERP as well as in Bank statements but during analysis, there is some missing records which will result in wrong justification of results. 

3. Potential Fraud:

It prevents the business from any potential frauds by displaying the difference in bank reconciliation statement and illegal transactions as it shows the actual amount present in the account in demanded date. It displays if someone has stolen your money as it generates the auto filled Tally generated result showing the mismatch in an amount in ERP and Bank statements.

It detects if any error entry has been made either from the part of the bank or that of the organization.

Bank reconciliation is a must in the place where there is a mismatch between the ERP system and the bank account in this way it helps in detecting the potential threat to the banking accounts. 

4. Over fee charged by the bank:

There is a need to determine that the fee charged by the bank id rightful one or should have been charged in the first place. Fees charged by the bank may be an overdraft fee among others.

In conclusion, the bank reconciliation ERP helps you to make decisions that require funds in critical circumstances while considering future payments and receipts. Finance is the most vulnerable asset for any organization, and Bank Reconciliation ERP helps you to uncover the irregularities into various transactions and providing a control mechanism to secure the most valuable resource of the organization.

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