Why bank reconciliation matters more than finance teams think
On what it costs when the books run behind the cash.
Bank reconciliation usually gets treated as a bookkeeping task – a reasonable take on the process in my opinion. A statement, a ledger, a match. Done carefully, it works. The question that needs to be asked is – what is the effort involved in reconciliation and is that level of effort truly needed?
If a payment cleared your account this morning, how long before your ERP shows it, matched to the right invoice? And how many people would have to touch it to get it there?
For teams whose bank data arrives as files, the honest answer is whenever the next import happens. Because how often reconciliation happens is dictated by difficulty. The harder the bank data is to get in, the longer the books run behind the cash, and the longer anything wrong stays hidden.
One thing, obvious but often forgotten amidst the day to day matching, is that bank reconciliation is the link between cash movement and accounting accuracy. The better the ledger and the accounts keep up with one another the better the link holds up.
Where the lag comes from
Some ERPs can connect to a bank directly, but the connection often has to be custom-built for that ERP and that bank. Other ERPs limit how many banks can be connected. Where a connection is not possible or too expensive to build, the fallback is a manual upload.
Take one company with three banks. Someone logs into each portal and exports a statement. One bank formats dates one way, another splits amounts into separate debit and credit columns. Each file is reshaped to fit the ERP’s import template, uploaded, and anything rejected in the import process needs to be fixed manually. Only then does the matching start. Every manual step is a chance to introduce a new error.
Nothing in that routine needs an accountant’s judgment, yet it is where much of the time goes. What we found is that our customers get back around 200 hours a year once the manual tasks involved, from handling statements to matching transactions, are automated. That is five working weeks, spent on moving data to the place where the real work begins.
Implications of a late reconciliation
Consider a client who sends a payment of €2,350 on a Tuesday. The reference on the transfer reads “March”. The money is in the bank, but the ERP has no way of knowing which invoice it belongs to, or whether the payment is related to multiple invoices, so the invoices related to the customer stay open. By Friday it is showing as overdue, and someone in credit control sends a reminder to a customer who has already paid.
Nobody made a mistake. The payment arrived, the bank recorded it, and the books did what they could with the information they had. The gap sat between the bank and the ledger, and it took a person to close it. Multiply that by the volume of a growing business and unmatched items stop being the exception. They become a queue that someone needs to work through every month.
More importantly, it is where the cash figure suffers. An unmatched receipt is cash the business has but cannot allocate. A payment that has left the account but not yet reached the ledger is cash the books still show as available. So any decision about payments, funding or FX that leans on that figure is leaning on an older picture.
Why it gets harder as the business grows
For a company with one bank account and a handful of transactions a day, the manual routine is fine. The trouble is that manual work does not scale neatly. Add a second entity, a third bank, a foreign currency account, and everything multiples: more portals, more formats, more files, more unmatched items. The ERP might absorb only part of that growth due to limited or capped connections or need for custom links. The majority of it falls on the finance and accounting teams that absorb it by putting in more hours.
It also changes whose time is used. Accountants who should be investigating genuine exceptions, such as an unexpected charge or a short payment, are too busy downloading, reformatting and uploading.
What a single connection changes
Fyorin’s Bank Feeds Hub is built around that gap. It is the missing link between your banks and your ERP: one connection that carries data from more than 5,000 banks, including accounts held outside Fyorin. Fyorin standardises the transactions before they reach the ledger, so there are no statement downloads, no CSV uploads and no reformatting. Data moves from the bank into Fyorin and from Fyorin into the ERP in real time, and each transaction is logged and traceable. ERP sees it as one connection, however many banks sit behind it, and adding a bank or entity takes minutes rather than a new build.
The matching is built for real payments, even the ones with messy references. Fyorin matches transactions even when the reference does not match the invoice, so a payment like the “March” has suggested links. The team’s attention goes to the exceptions that need a decision.
Reconciliation will always be seen as an admin, that won’t change. What changes is how far behind the cash the books are allowed to run. When bank data reaches the ERP continuously, standardised and matched, the check happens as the cash moves, not when someone finds the time. Lower the effort it takes to run reconciliation and the books will keep up.
Article written and sponsored by James Camilleri, CEO, Fyorin
