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Automating statement reconciliation is crucial for many businesses, especially for those in the banking and financial services sector. It ensures that all invoices have been received and all documents are posted correctly. Efficient and accurate statement reconciliation can help businesses to check for discrepancies in data, eliminate duplicate information, and resolve missing invoices.
Undoubtedly, manual reconciliation is the most inefficient and expensive process in a company. According to a survey by EY, up to 59% of a financial department’s resources are spent on managing transaction-intensive processes. And around 95% of this effort is wasted on transactions that already match, rather than problem entries that actually require attention.
As financial transactions are getting more complex, businesses have begun dealing with multiple bank accounts from several vendors. A statement from a single supplier can contain hundreds and thousands of invoices while taking hours or even days to manually reconcile. Additionally, managing the daily task of processing invoices and collecting payment creates a very heavy workload for the accounts payable team and only a small amount of supplier accounts can be reconciled. Wouldn’t it be better if this tedious process can be automated?
Thanks to the advancements in Robotic Process Automation or RPA technology, businesses can now automate these tedious and repetitive processes with high accuracy. This allows accountants, human resources to focus on tasks that are of higher value. In this article, we’ll see how Robotic Process Automation helps in automation of statement reconciliation.
Banking and financial services institutions deal with large volumes of manual reconciliation works. Invoice processing, authenticity verification of invoices, signature forgery verifications, extracting digitizing information from handwritten forms, manual matching of records and invoices, etc are a few among the many manual reconciliation works that these institutions have to deal with. A large number of human resources are allocated to carry out these operations and they have to do these repetitive and monotonous tasks throughout the day, throughout their career. Other than the wastage of time and human resources, a Few of the inefficiencies associated with manual statement reconciliation are;
RPA solutions that are powered by artificial intelligence can help speed up reconciliation processes in banks or finance organizations. Currently, we can see an overwhelming need to improve the efficiency in the traditional reconciliation process, which is very time consuming and prone to error.
RPA refers to software that can be used to mimic basic tasks that are usually performed by humans. The software robot can be trained to carry out processes with multiple steps and applications like sending a receipt message, checking the form for discrepancies, filing the form in a folder, etc. It is primarily designed for office type operations that require several types of tasks to be carried out in a specific order. It creates and deploys a software robot with the ability to launch and operate other software.
AI-powered RPA is one step above the normal RPA, where the system learns how to do the job more efficiently over time. For example, extracting handwritten information from forms is a tedious task. It can be automated using AI-powered RPA, where the system can extract information from the form using machine learning algorithms and digitize the contents and execute the process defined by the admin. If you’d like to learn more, you can check out this article which explains what is RPA and how it is different from Artificial Intelligence.
With RPA, businesses can use automation solutions to upload all the statements that they receive in paper, PDF, and excel formats onto a cloud-based statement processing system. These statements are then automatically reconciled against data from the accounts payable ledger. Any credit notes and invoices that are missing or duplicated are flagged, so that immediate action can be taken. Any miss-postings and/or data errors are highlighted for the accounts payable team to investigate further.
Now, the account payable team does not have to spend hours sifting through various statements and checking for errors. Instead, they can focus on solving the exceptions that have been highlighted by the system. This allows them to proactively ask for missing invoices and credit notes from suppliers. These reconciliations can also be shared with suppliers directly so that they can see the real-time status of their accounts. This reduces the need for phone calls and e-mail inquiries to the accounts team.
Companies and managers can be provided with a real-time view of the invoices and credit notes that still require processing. This gives them an insight into supplier liabilities, improves accruals reporting, and validates the accuracy of their invoice processing. Duplicate invoices can be identified quickly along with payments to suppliers that cannot be matched to an invoice. This helps improve cash flow and recover payments faster.
Once you have decided to integrate RPA into your business operations, you might be a little confused on how to start automating. You can either use pre-built RPA tools or you can develop a custom RPA solution to meet your business needs. Some of the most commonly used RPA tools are:
BluePrism is ideal for medium and large companies. It can make operations faster and more cost-effective by automating, manual, rule-based and repetitive office processes. The tool provides a flow chart like a design with a drag and drop feature to automate numerous business processes. You will need some amount of technical knowledge to use this tool.
UiPath is an ideal tool for non-developers. It allows organizations to design and deploy a robotic workforce for their industry. It is mainly used for automating desktop or web applications. The tool is ideal for businesses of any size.
With automation anywhere businesses can build smart bots that carry out tasks in different areas of the business. The tool can be deployed even in the front-end for rules-based processes as well as in the back-end for a true and complete RPA solution.
In many cases, the business process that you want to automate is not possible to automate with the tools mentioned above. Especially if you need to automate processes that need AI’s intervention. In that case, you can go for a custom RPA solution – Lets get started.
As signature forgery is becoming increasingly prevalent, banks are hiring more people for the verification of signatures on cheques. The team has to analyze the signature on the cheque, compare it with the signature copy stored in the bank database, and verify the authenticity of the signature. Manual verification of signatures can be a very time-consuming process and is often inaccurate.
One of our clients, Mandiri Bank (Indonesia) wanted a solution that could automate the cheque clearance process. We developed a hybrid AI-powered RPA solution that could be integrated with the existing bank management system. With computer vision, the solution was able to learn textual patterns in scanned images or in actual document visuals. The system used deep learning algorithms to compare it with the original signature to identify even the minutest variations. After implementing the solution, the company saw a reduction in the manpower requirement from 12 employees to 2 employees. The signature verification time was also reduced by 70%. Check out this detailed case study if you’d like to know more about how we automated the cheque clearance process.
Every month, suppliers were asked to provide invoices for the goods and services they provided to the company. The statements were usually sent via e-mail or in PDF, Excel, and plain text files. A team was assigned to copy and paste all the information into an excel spreadsheet template. After this, the values were compared in the Oracle Accounts Payable (AP) Module to check whether the invoices were paid, not received, or on hold. Finally, the spreadsheet would be filled with the required information and then sent back to the suppliers.
In order to complete the entire reconciliation process, it took NHS Wales an average of 200 hours per month for each supplier. For larger suppliers, the process would take twice the amount of time. To get around the inefficiencies, the company implemented an RPA solution that could mimic the tasks in the reconciliation process quicker and more efficiently. The software could take care of each step in the process from logging into the email and retrieving data to logging into Oracle and categorization of the invoices. The company saw a huge difference in the time taken by the software to perform these tasks. From 200 hours per month or 2400 hours per annum, the amount of time spent on reconciliation was cut down to 500 hours per annum. This helped the company save nearly £23,000.
Balancing your business checkbooks can take several hours and a huge chunk of your energy. It can also result in numerous errors and inconsistencies. There are several risks that are associated with manual account reconciliation like missing or lost reconciliations, unreconciled accounts, improper use of roll-forwards, and insufficient justification or documentation. This is why many businesses have started using RPA to track reconciliation progress, get reports on exceptions, prevent the occurrence of fragmented data, and speed up the reconciliation process.
RPA bots can perform several important tasks in each stage of the process like:
Extracting information from hand-written documents, filled-up forms, etc is a tedious process. With the help of pattern recognition algorithms, it is possible to identify the hand-written contents and digitize them. The digitized information and be then used for automating tasks such as processing invoices, updating databases, etc.
Authenticity verification of the signature, account details, etc can also be automated using AI-powered RPA solutions. These solutions use AI technology to compare the given data with the verified data available in the organization’s records to verify the authenticity of the given data. The solution can notify a human counterpart if the confidence score of the system is low so that the human counterpart can manually verify the authenticity for such transactions.
If you have a business process that needs to be automated, the first thing you need to do is to consult with an RPA solutions provider. We (Accubits Technologies) has helped several businesses to automate their business processes with RPA tools as well as AI-powered RPA solutions. The first step is to identify the business process and define the automation plan.
In the automation plan, you need to include the dependencies of a process, which includes, humans, dependencies with third parties, dependencies with other departments, etc. Once you have mapped the dependencies, you need to define the system integration. That is, the new RPA solution should seamlessly integrate into your existing business processes and software. After plotting the dependencies and system integrators, the solution provider can suggest the model best suited for automating your business processes. If you’d like to know more about this step, feel free to reach out to us for a no-obligation consultation.
Automating your statement reconciliation process can help you focus on the results instead of the actual process. Human resources will only have to deal with the exceptions that have been identified by the system, which cuts down on time and costs exponentially. The flexibility of RPA solutions and the advent of Artificial Intelligence approaches have created a new era of opportunity for the banking and finance industries. If you work with large scale statement reconciliation processes and are looking for a way to make it more efficient, reach out to our team at Accubits and we can help you out.
