Business

White

PaperLelogixReconciliation

What is Reconciliation? The definition of reconciliation, in this context, is the process of comparing or matching corresponding transactions between two sets of data that

ultimately should be identical. Transactions found in one of the data sets but not in the other are said to be outstanding. In order to find the real

difference between the two data sets you must first match off all the transactions that are in fact a match, to find the transactions that are

outstanding.

”The manual

cross-checking of bank

statements against

one’s own ledger is a

tedious, time-

consuming process”

”The manual

cross-checking of bank

statements against

one’s own ledger is a

tedious, time-

consuming process”

Why Reconcile?Why Reconcile?Every organization needs to perform check reconciliation regularly to ensure the

correctness of financial reports and ledger balances.

The Cheque reconciliation feature allows the Accounting Group (AP) to reconcile the

checks produced to the cleared check records from the bank. Typically this is done

by matching the check file sent from the bank against the accounts payable

cheque’s record by the check number, issue date, payee and amount. The check

reconciliation process not only matches the cleared checks but also allows the users

to void and cancel stale checks.

Introduction

Lelogix's Cheque Reconciliation services give you fast, accurate

information regarding cheques cleared through your bank

accounts. You can match cheques cleared through your business

account against your issued cheque file.

We will automatically compare your electronic file of issued cheque

data to paid cheque files. We provide you with detailed reports on

cheques paid, cheques outstanding, and cheques with exceptions

(such as unmatched amounts), so you can easily detect

discrepancies in payment information.

BackgroundTreasury Department is the government agency of St. Kitts and

Nevis. The agency has started using Automatic Cheque

Recnciliation Service provided by Lelogix.

Stakeholders

Treasury Department, Ministry of Finance, St Kitts & Nevis.

Why Reconcile?The purpose of bank reconciliation is to find the transactions that amount to the difference between the bank balances and

ledger balances for a given period. These transactions are normally referred to as exceptions. The exceptions then need to

be investigated to ensure that there is a “normal” reason for why they are not matched and then finally put into a

reconciliation report. By far the most common way of doing bank reconciliation is to use a marker or pen and manually

match the transactions on a bank statement with the transactions on a printout from a general ledger. Every time a match is

found, it is then ticked off on the bank statement and on the general ledger printout. This time-consuming task is then

repeated until all matches are found and only the exceptions are left for investigation.

Manual reconciliation is time-consuming. And because this is an important task, it is normally performed by well educated

people on a good salary. Statistics tells us that, on average, a person can reconcile less than ten transactions a minute. If you

calculate the number of transactions for a given period, the average number of transactions a person can manually match,

and the salary of that individual, you can very quickly compute the cost of manual ticking-off involved in matching the

transactions. This is the part of the matching process that is absolutely unnecessary, because it can very easily and simply

be automated.

DRAWBACKS OFMANUAL RECONCILIATION

?Tedious & consuming

?Risk for human errors

?No managerial oversight

?Save days

?Make user happier

?Focus resources on

strategic matters

BENEFITS OFAUTOMATING RECONCILIATION

Challenges in ReconciliationManaging increasing volumes :

Currently, Treasury department and bank face the challenge of ever increasing volumes of transactions to be reconciled and the

complexity of new instruments coupled with regulatory compliance demands and also the need to reduce the inefficiencies in

their operations.

The need to reduce manual errors during reconciliation is of utmost importance to reduce potential operational risk and thereby

minimize operational cost without hindrance to the normal processes.

Reducing manual reconciliation errors :

Achieving data consistency

Achievement of consistency in trade processing, data management, accounting to comply with standards, clearance and

settlement, control and compliance should be able to define an integrated process flow management within an organization.

Diversified environment

Another major challenge facing the reconciliation analysis is the emergence of new asset types and structured deals with more

complex technicalities and calculations involved, which would require modification/improvement of existing systems to

accommodate reconciliation of such complex and diversified deals.

Solution of underline challenges Manual reconciliation is time-consuming. And because this is an important task, it is normally performed by well educated

people on a good salary. Statistics tells us that, on average, a person can reconcile less than ten transactions a minute. If you

calculate the number of transactions for a given period, the average number of transactions a person can manually match, and

the salary of that individual, you can very quickly compute the cost of manual ticking-off involved in matching the transactions.

This is the part of the matching process that is absolutely unnecessary, because it can very easily and simply be automated.

A huge advantage with an automated bank reconciliation system is that human errors are eliminated. When doing a manual

reconciliation process, the last step before creating the report is to ensure that no errors have been made during the matching

process. To do this you need to compare the sum of the exceptions with the difference between the two balances. If these

numbers are identical, your reconciliation is correct. What if it is not correct? What if you have made the number-one error in the

manual matching process and forgotten to tick off one or more transactions? Maybe you were distracted? Someone called you

or stopped by your desk to ask a question? This happens very easily, but hopefully you can find the error and can correct it. If not,

the cost of the reconciliation will have instantly doubled, since now you have to start all over again. Clearly the manual

reconciliation process is very costly. Automating the reconciliation process can save organizations a great deal of time and

money. The staff can focus their efforts on managing the exceptions instead of ticking off transactions that match. Exposure to

risk is greatly reduced because errors and fraud can be discovered earlier. Time saved can also free staff for higher value tasks

while enabling greater overall financial control.

Eliminate errors – automatically

Implementation and Maintenance

The ITMS-National Bank Integration project was initiated from Treasury department (Govt. of St. Kitts and Nevis). The existing

software used by treasury department does not having facility to reconcile checks or other transaction automatically. The

department user does the reconciliation manually. This process is very tedious and time consuming and need lots of man power

and manual effort. There are so many time the user makes mistakes while doing the reconciliation that need support from

technical person to resolve the problem. The department of treasury got hard copy of statement and checks from the bank every

day, this process also required man power effort.

The treasury and bank both parties want a flexible system to remove the above complexity to ease there day to day work.

Benefits include

Why Lelogix ?

Low Costs

Onsite/ Offshore delivery model

Provides End to End Solution

Experienced Resources

Production Support & Enhancements

Help you to get Software Licenses

Help you to get Hardware

One shop for all your worries

For any Query, please visit www.lelogix.com

The information contained in this document is proprietary.

©2017 Lelogix, All rights reserved.

Control of data : Automated reconciliation workflow derives process convergence, resolution and reduction of errors and

redundancies, increases productivity and compliance adherence.

Faster analysis : Saves effort in 90% of the processes associated with manual reconciliation.§ Business rules:

Automated matching process based on pre-set business matching rules. Automatic exception case creation for unmatched

data.

Integrated Process: An integrated business solution provides better collaboration between vendors, banks and

customers. This tool has a fully integrated exception processing.

Report generation : Automatic report generation highlighting mismatches and helps in manual analysis of predefined

business rules.

Automated workflow : Automated workflow derives process convergence, resolution and reduction of errors and

redundancies, increases productivity and compliance adherence.

Accuracy of activity

Error correction

Matching to the source

Documenting the process and completion

Ensure a consistent process

Verify transactions in a timely manner

Best Practices