Large organizations have always had problems with their financial management processes. In the worst case, financial reporting involves collating information from dozens of individuals and systems, often using incompatible formats, and assembling this data into a single coherent document.
Although some companies are beginning to look at automated solutions, account reconciliation remains a painful, lengthy process for far too many organizations.
What Is Account Reconciliation?
If you’ve ever balanced a checkbook at the end of the month, the idea of account reconciliation should be a familiar one. Account reconciliation is a business process in which transactions in financial accounts are compared against statements from an external financial institution, such as a bank or credit card company.
The purpose of account reconciliation is fairly straightforward: It finds any errors or problems that have occurred in your financial activities. For example, account reconciliation can help you identify when your accounts are used fraudulently, when you’ve been charged twice or the wrong amount, or when you exceed the limits of your credit card or checking account.
In most cases, account reconciliation entails a back-and-forth comparison between your account registers and financial statements to ensure that both are in agreement. You may need to add to your statement balance (such as for deposits that the bank hasn’t recorded yet) or subtract from the balance (such as for overdraft or ATM fees) in order to have the accounts match up.
The Challenges of Manual Account Reconciliation
Unfortunately, far too many organizations are still struggling with the account reconciliation process, especially those using manual workflows. A study by Dynamic Markets found that 25 percent of corporate respondents have seen delays during their financial close period due to problems with account reconciliation — a higher number than any other issue, including audit trails and executive certification. According to HR consulting firm Robert Half, 58 percent of U.S. companies still carry out account reconciliation manually.
Manual account reconciliation can create problems for a number of reasons, including:
- Staffing issues: Employees may quit, go on vacation, or simply be tardy in sharing their reports, leading to fragmented data and a frustrating lack of visibility.
- Lack of control: Manual processes are unable to enforce financial reporting from slow-moving segments of the organization, resulting in a delayed or inaccurate financial close.
- Human error: Mistakes can sneak into manual financial systems from a variety of sources, resulting in accounts that are perpetually out of balance and spawning issues with audits later on down the line.
Account Reconciliation Options
Recognizing these issues with manual account reconciliation, more and more organizations are turning to Oracle’s financial performance management systems. Oracle offers two main solutions for account reconciliation, depending on whether the software is deployed on-premises or in the cloud.
For on-premises deployments, Oracle offers Account Reconciliation Manager (ARM), an on-premises solution for account reconciliation. Oracle Account Reconciliation Cloud Service (ARCS) is the cloud-based counterpart of Oracle ARM.
The feature sets of both ARM and ARCS are nearly identical, so the most important factor in the decision should be whether you want an on-premises or cloud deployment. Migrating to the cloud can be a smart choice for organizations seeking to reduce the time and money required to install and support the software.
How Datavail Can Help with Account Reconciliation
As an Oracle Premium Partner, Datavail is prepared to help any organization looking to break free of its manual account reconciliation processes and migrate to Oracle ARM or ARCS. In addition to migration, Datavail also offers the following services for Oracle Hyperion on-premises or ARCS:
- Configuration and customization
- Data integration
- 24x7 managed services
- Strategy and roadmap development.
Want to learn more about what Oracle ARM and ARCS can do for your account reconciliation processes? Check out our white paper, Oracle Account Reconciliation — It’s Time to Get Your ARCS in Gear. You’ll also want to read about our Hyperion Application Performance Management (APM) platform developed by Accelatis, recently acquired by Datavail. Learn more here.
Subscribe to Our Blog
Never miss a post! Stay up to date with the latest database, application and analytics tips and news. Delivered in a handy bi-weekly update straight to your inbox. You can unsubscribe at any time.
Most people will encounter this error when their application tries to connect to an Oracle database service, but it can also be raised by one database instance trying to connect to another database service via a database link.
EPM applications help measure the business performance. This post will help you choose the best EPM solutions for your organization’s needs and objectives.