As companies transition work activities to Shared Services there is an increased need to define responsibilities clearly for activities where visibility to underlying detail is available remotely, and not in the Shared Service Center where the transactions are recorded.  This is particularly true for the Account Reconciliation process, where the reasons for reconciling items are often known only to the Shared Service’s internal customers who are knowledgeable about the details for specific account transactions.

Recently a Peeriosity member at a large global technology company was interested in improving their account reconciliation process.  Using Peeriosity’s patent-pending iPolling^TM process they were able to quickly source ideas from their peers.  Here’s the reason cited by the member for creating the iPolling^TM questions:

“When performing account reconciliations at our company, in case of discrepancies we notify our internal customers through e-mail. However, our approach and the format of the e-mails make it look like we are requesting additional information rather than asking them for help to resolve discrepancy issues.  We are interested in learning from other members what practices are followed for communicating discrepancies and getting assistance with getting discrepancies resolved.”

While the requirement to obtain local staff assistance to fully and accurately complete account reconciliations is common across all companies with a centralized process for account reconciliations, interestingly, only 21% of member companies have implemented a standard format for communication with internal customers regarding reconciling items. An additional 21% are currently evaluating the idea of doing so, with 58% of companies have not considered the idea of using a standard format.

This result is surprising, with almost all companies completing rigorous procedure changes within the past few years to comply with new Sarbanes Oxley requirements to ensure the integrity of financial records.  While an ad hoc approach, if rigorously applied, might achieve the same level of quality as one that is standardized and consistently followed, it certainly won’t ever be as efficient or low cost. 

The follow up poll included in the iPolling^TM questions asked whether the company had a defined escalation process when no response is received from the internal customer regarding the status of reconciling items.  While an escalation process is in place at 32% of companies, more than twice as many, 68%, are not using a consistently defined process for escalation issues when the internal customer is not responding.   While this result may be surprising, given the high percentage of companies that don’t have a standard process in place for contacting internal customers, it is probably even more important to have a clearly defined process for escalation when responses are either not received in a timely manner, or they are not sufficient. 

Here are several of the comments added by iPolling^TM participants:

• We consider the account, what may have created the reconciling item, the department involved, and research tools available to determine to whom and in what manner we reach out.
• Generally, we do not have a standard process. An exception is our SAP GR/IR accounts. Although we have standardized the GR/IR process, we continue to struggle in getting our internal business partners to understand the actions needed or suggested. The large variability of those customers and their corresponding knowledge of the procurement process is the primary reason.
  • The struggle you are encountering is very similar to our struggles. There is a large communication gap between the staff completing the reconciliations and the internal staff that we gather information from and provide information to. My goal is to define a more service-focused approach.
• We have a Global Shared Services global escalation policy that is very broad in scope and would also include a non-response to a request for resolving a reconciling item.
• In our SLA contract, we have a specific escalation issue process.  These standard templates are designed with internal customer input.
• We use a recon system that enables us to run monthly reports and metrics on aged reconciling items. These reports are shared with our Controller and we have expectations that reconciling items are cleared within the following month (even if the clearing is the responsibility of the customer). It is the responsibility of the recon preparer/approver to ensure they are working with the customers to get reconciling items cleared. Monthly or bi-weekly meetings/phone calls are set up by some of the recon preparers with the customers to go over outstanding reconciling items. We have also shared the recon expectations with our customers and they know preparers are being held accountable for getting the reconciling items addressed timely. We have no standard form or escalation process; it is all on a one-off basis. The System Admin for the recon system also meets with the preparers that have aged reconciling items every month to understand their status and action plans and a summary of those meetings is provided to our Controller. Our Controller has been involved in some of the monthly meetings with customers if reconciling items are falling behind.
• We use an informal process through email, phone calls, and meetings and we have been successful at addressing reconciling issues. Our approach is to build personal relationships and use escalation when needed.

Because Peeriosity members are able to follow up directly with other members, it’s easy for everyone to check with peers to better understand their approach and consider alternatives.  As is true for any poll or benchmark result, once you have a clear picture of how leading peers respond to a common problem, the path toward improving your current process becomes much clearer.

Does your company use a standard format for communicating and reconciling items with internal customers so you can efficiently and effectively get their assistance?   If internal customers don’t respond with the information that is needed to complete the reconciliation, do you have a defined and consistent process for escalation?

Who are your peers and how are you collaborating with them?

“iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer Mail^TM, members can easily communicate at any time with others who participate in iPolling.