{"id":3723,"date":"2018-12-17T23:01:10","date_gmt":"2018-12-17T23:01:10","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=3723"},"modified":"2022-09-05T18:41:14","modified_gmt":"2022-09-05T18:41:14","slug":"consolidating-the-account-reconciliation-process","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2018\/12\/consolidating-the-account-reconciliation-process\/","title":{"rendered":"Consolidating the Account Reconciliation Process"},"content":{"rendered":"

Introduction<\/strong><\/span><\/p>\n

For companies with operations in many locations domestically and around the globe, the number of accounting transactions to record every minute detail of business activity can be daunting, as can the process of reconciling those transactions for completeness and accuracy at month’s end. Management and legal reporting activities must comply with specific rules and standards, and the account reconciliation process<\/a> is no exception.\u00a0 Centralization of work processes into Shared Services<\/a> can further complicate the process since much of the transaction activity still resides within local operations, where the knowledge about those transactions often resides.\u00a0 This often suggests a shared responsibility for account reconciliations, with overall ownership either local or centralized, depending on the specific attributes of each account.<\/span><\/p>\n

With the addition of advanced technologies and tools, many companies are shifting towards greater consolidation of the account reconciliation process, often into regional Shared Service centers, but sometimes even more globally, with the effect of eliminating as much local site responsibility as possible.<\/span><\/p>\n

Company Experience<\/strong><\/span><\/p>\n

A recent PeercastTM<\/sup> in our General Accounting (R2R) research area<\/a> featured a global manufacturing company with $5B in annual revenue, sharing its approach to transitioning the Account Reconciliation process to a consolidated location.\u00a0 Here is an overview of their transition timeline:<\/span><\/p>\n

    \n
  1. Pre-2014 – Single VP for Shared Services, but structured as a decentralized organization<\/span><\/li>\n
  2. 2014 – Move to consolidate European Shared Services into a single low-cost location in Europe<\/span><\/li>\n
  3. 2015 – Implemented Blackline solution and consolidated European Shared Services reconciliations into the European Shared Services Center<\/span><\/li>\n
  4. 2016 – Added North American Shared Services reconciliations to the European center on an opportunistic basis<\/span><\/li>\n
  5. 2017 – Focused effort to add non-SAP and non-Shared Services reconciliations to Blackline using Shared Services standards<\/span><\/li>\n
  6. 2018 – Positioned to absorb non-Shared Services SAP reconciliations<\/span><\/li>\n<\/ol>\n

    Some of the successes from the consolidation of account reconciliations cited include:<\/span><\/p>\n

      \n
    1. Consolidation into a single location improved the consistency of reconciliations and the team’s desire to streamline and simplify the reconciliation process.<\/span><\/li>\n
    2. Having a critical mass of personnel in one location reduces the risk created if key personnel leave the company since the knowledge no longer resides with only a few people<\/span><\/li>\n
    3. Several staff members have been promoted into regional roles as a result of having greater knowledge about other geographies<\/span><\/li>\n<\/ol>\n

      Additional details regarding the efforts of the featured company can be found on the Peeriosity member website, exclusively for members of Peeriosity\u2019s General Accounting (R2R) research program.<\/span><\/p>\n

      iPollingTM<\/sup> Results Review<\/strong><\/span><\/p>\n

      Peeriosity\u2019s iPollingTM<\/sup> was recently used to better understand how standardized the account reconciliation process was structured at member companies.\u00a0 The results suggest that while 85% of member companies report having a standard structure\/format for the preparation of account reconciliations, only 35% indicated that they were very satisfied with their implementation.\u00a0 An additional 32% indicated they were somewhat satisfied, and 18% reported that the process, while implemented, needs improvement.\u00a0 The remaining 15% of companies either haven\u2019t yet implemented or are currently evaluating the opportunity.<\/span><\/p>\n

      \"iPolling:<\/p>\n

      Here are several of the added comments from members:<\/span><\/p>\n