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Bank reconciliation in the era of open banking

Accountants are well aware of bank reconciliation operations and how time consuming they can be, while at the same time risking errors or distraction on the part of staff who have to deal with them frequently.

There are a number of software packages that can automate this activity and many companies have decided to rely on them, but with open banking you can take a further step forward in the innovation of your business.

What is bank reconciliation?

A bank reconciliation is an accounting operation in which you check that the accounting entries correspond to the movements on the bank statement. Thus, when you carry out the bank reconciliation from an operational point of view, you are matching all the incoming and outgoing transactions made to and from your bank, making sure they match up perfectly with the purchase or sales invoices.

It is very important to make sure there are no discrepancies or mismatched transactions. If this happens it becomes necessary to intervene manually to reconcile the accounts.

Bank reconciliations are one of the most important financial control processes that are carried out regularly within each business to ensure everything has been done as planned.

From a more strategic point of view, what is being checked is that a company’s economic resources are being used correctly to achieve the company’s objectives.

Through bank reconciliation, as with other similar activities, possible deviations in finances can be detected and corrected by working together with colleagues in other areas in order  to understand how they arose.

Bank and tax reconciliation

In addition to bank reconciliation, there is also tax reconciliation. It is important to know exactly what the difference is between the two, and above all to bear in mind that bank reconciliation, which we are now interested in, has the unique objective of checking that the bank movements of a company match the accounting records perfectly. This is done by consulting the company books and the bank movements recorded in the bank statements.This is done very carefully even though it is actually not a compulsory process. What company doesn’t care if the accounts add up?

Benefits of bank reconciliation

This operation, which we will see later on figures as the protagonist of important solutions based on open banking, brings numerous advantages to companies and new opportunities such as that of implementing a policy of savings and process optimisation.

  In general, this process allows for better control over economic resources and more effective management of accounting records, but it also provides the opportunity to have up-to-date data on the company’s bank movements in the event of an inspection or quality information that can be used to improve decision-making.

3 tips for effective bank reconciliation

Before we find out what bank reconciliation has to do with open banking, here are three tips for doing it comfortably and correctly.

  1. Prepare all the necessary documentation accurately and in advance, including travel expense receipts, which should be requested beforehand from the relevant area.
  2. Cross-check the cash flow, cash register and cash account to facilitate the detection of any errors.
  3. Start by checking the previous month’s final balance to speed up the process of identifying errors without reviewing everything point by point.

Bank reconciliation and open banking

In the world of open banking, and within the Fabrick ecosystem itself, there are a number of solutions offering automatic reconciliation in an easy and convenient way.

One of these is the Payment and Collection Engine: a true digital platform for the integrated and centralised management of omnichannel payments made available to end customers and sales network in various sectors, ranging from insurance to large-scale distribution, from retail to pension funds.

In addition to guaranteeing smooth bank reconciliation, associating the payment transaction with the paid security upstream so as to make the reconciliation process automatic for both physical and digital payments, Payment And Collection Engine by Fabrick offers second-level reconciliation between the transaction and the settlement, for payments made via SmartPOS, Virtual POS, Bank Transfer on Virtual IBAN and now also SEPA Direct Debit PSD2 PIS.

Among its most popular features are deferred payments and collection splitting. Find out more at this link.

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