Finance managers are always under pressure to improve the close and reporting process in their respective organization. They keep trying different methods to speed up the process of generating error free financial reports on time. However, simply speeding up the process is not enough as there is also greater demand for more reliable and transparent information. As a Chief Finance Officer (CFO) or a finance manager, you have to better understand that your enterprise not only needs a smarter solution, but also needs a comprehensive solution that encompasses all your commercial operations.
Not only with CFOs or account managers, tension and anxiety to complete a report becomes evident on the faces of other members in finance and accounting department during month end. It is quite common to see staffs in accounting office toiling for late hours reconciling bank statement with the general ledgers. It often happens that under tremendous pressure to meet tough deadline, the process of manual reconciling would lead to errors and thus results in inaccuracies in financial reports.
How to ensure flawless financial reporting?
Ineffective financial reporting not only wastes valuable time and resources, obscures transparency, increases the risk of errors, it also causes an organization to base critical business decisions on incorrect or incomplete information. To avert such situation, it is finance department’s utmost responsibility to minimize data compilation time and effort to improve their ability to analyze results.
Many businesses audit their accounting records to ensure the validity and reliability of their financial statements. For example, a bank reconciliation statement is a critical piece of accounting information on a business's cash balance.
Differences between a bank's record of cash and a business's record often exist because of the reporting time delay from a business deposits or cheques to when a bank clears the cheques and records them. Cash reporting differences may also result from the time lapse, during which bank charges and credits remain unknown to a business until a bank statement becomes available.
Understanding the accurate cash balance is critical, as cash balances plays a vital role and upon which various reports like cash flow statement(s), cash forecasting, and budgets are prepared. Cash management systems and processes are pre-requisites to execute payments, collect receivables and manage liquidity.
Managing the channels of collections, payments, and accounting information efficiently, becomes imperative with growth in business transaction volumes. This includes enabling greater visibility to the treasury advisor by connecting all the nodes of channels that either disburse or receive the cash to internal corporate systems, expanding the scope of cash management services to include ‘full-cycle’ processes (i.e. from purchase order to reconciliation) via e-commerce or cash management services .
How to integrate electronic bank statement with ERP LN?
Electronic bank statement or e-statements is a functionality in Enterprise resource planning (ERP) LN, which reconciles the electronic bank statement with that of record of cash transactions like receipts and payments in ERP LN. Electronic bank statements contain the same information as paper statements, but in an electronic format, which offers several advantages over paper.
Here are just a few of the benefits of opting out of paper and choosing to receive your statements electronically:
1. Easy access – Your statements are always available, and you can view them, save them or print them at your convenience from anywhere with an Internet access.
2. Security – Less financial information in your mailbox reduces the risk of identity theft.
3. Organization – Access up to 6 months of statement history online, or save your statement to your restricted access folder on the server/personal computer rather than hunt through old paper files.
How to interpret electronic bank statement?
The electronic bank statement that we generally receive from bank(s) in the formats like MT940, CAMT.053 and CAMT.052 can be converted into ERP readable format.
SWIFT MT940 is a common bank statement file that is in use across Europe. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) was established by a group of European bankers who needed a more efficient and secure system for inter-bank communications and transfer of funds and securities. SWIFT messages are preset and referred to by category, while the numbers are called MT numbers.
Stages below describe how an electronic statement should be interpreted:
Stage 1 - Electronic statements that are received from bankers first should be converted into an ERP readable data. Usually, the electronic file is received in formats like MT940 and a one to one field mapping is maintained in ERP LN. This setup helps the system to understand and convert the electronic file format.
Stage 2 - The electronic file received from bankers is copied into a specified path and after the file is converted into an electronic bank statement it is moved to Archive directory path. The process of moving to Archive directory is an inbuilt security check to avoid processing the same file twice.
Stage 3 - The converted file data is now ready to be matched to the open items in ERP LN and matching can be initiated either as an automatic process or as a manual process. In the automatic process, matching succeeds on passing the set conditions and tolerances. If a matching is failed, the system generates an error report, and the user on rectifying those errors can choose to manually reconcile those items.
How you gain from electronic bank statement with ERP LN?
In order to meet financial goals with confidence, your business needs a software that provides real-time visibility into revenues, costs, and profits. ERP LN provides flexible account structures for recording, analyzing, and monitoring the activities of each company or business unit. Here are just a few of the benefits of opting out electronic bank statement functionality:
- Elimination of manual effort allows companies to allocate more staff time to other higher-value activities
- Creates the ability to run shared service centers within the group of companies
- Global companies can employ a global solution for all sites across multiple different banks
What is your idea about optimizing electronic bank statement with ERP LN? Share your views on the comment section. Download our free ebook to learn how you can create accurate financial statement using Infor ERP.