Microsoft Dynamics vendors provide comparisons and opinions to professionals in the ERP/Accounting software selection process

 
 

Briware Solutions Inc.

Reconciliation Hazards to Avoid


Email | Print

Adding two numbers together is something we all learn to do in grade school.  Simple addition makes one assumption:  the numbers being added belong together.   One plus one always equals two, right?  Well, adding one gallon of water to one litre of water gives you neither two gallons of water nor two litres of water (in fact, it gives you 4.78 litres of water if you use a US gallon).   Adding any level of conversion to your addition can sometimes cause serious problems.  Just ask NASA, they lost a 125 million dollar probe because one team used pounds of thrust for calculations and the another used Newtons.    Why am I blathering on about conversion problems?  I’m blathering on because errors in correctly converting data is just one of the many things that cause major headaches when it comes time to reconcile General Ledger account balances to subledger transactions.

At the end of each fiscal period, accountants the world over say goodbye to their families to begin the process of tracking down the differences between their subledgers and their general ledger.  After driving themselves crazy locating that last $50, they usually find that the differences related to misplaced decimals, mis-matched units of measure, rounding differences, date synchronization or a variety of other extremely common data related issues.    Very few people that do reconciliations enjoy it.  Frankly, monthly reconciliations drove me out of accounting all together.

What a lot of GP users don’t know is that there is a tool available in Dynamics GP to assist you in your reconciliation process.  Many transactions can be matched or identified as unmatched using the built in reconciliation tools of GP.   Out of the box Dynamics GP can attempt to reconcile the subledger transactions to their general ledger counterparts for the receivables, payables, inventory and chequebook modules.  This is a very handy tool that alleviates a lot of the initial tick and tie work, but it won’t help you get to the bottom of what actually caused the exceptions in the first place.  For that you need a more advanced tool such as The Closer from Reporting Central.

The conversion example I mentioned above wasn’t pulled out of a hat.   This is exactly the kind of problem that process manufacturers often find themselves in.   A product might be purchased in 50lb bags but added to the manufacturing process in 1kg amounts.    Finding this kind of an exception by reviewing spreadsheets can be a nightmare yet that is exactly what one company spent more than a week trying to do.  They couldn’t figure out why their inventory was so out of balance.   There was clearly something wrong but all of the numbers looked right.   That’s what makes reconciliation so frustrating, the numbers usually look right even after careful scrutiny.   It takes the sophisticated processing of The Closer to help identify these kinds of exceptions and to provide hints as to where to look in order to solve the problem.

the-closerThe Closer does so much more than the out of the box functionality provided by Dynamics GP.   In seconds, The Closer can reconcile the following Sub-Ledgers to the General Ledger:

  • Accounts Payable
  • Accounts Receivable
  • Accrued Purchases (received not invoiced)
  • Cash
  • Intercompany
  • Sales
  • Inventory by Site/Class
  • COGS
  • HITB Inventory by Site/Class
  • Fixed Assets
  • Customer Deposits
  • Sales Tax

Unlike process automation, a reconciliation automation tool does not remove human involvement from the reconciliation.  While the tool will identify exactly where the issues are, a user will still be required to actually go fix them.  By removing the hours of effort in tracking down the issues, you are way more likely to get home to your kids during your month end close!

Need faster period end reconciliations??

Please contact me to discuss how we can decrease the time it takes your company to complete a period end reconciliation:   rod@briwaresolutions.com, 844-BRIWARE (844-274-9273).

By Briware Solutions, http://www.briwaresolutions.com

 

Comments are closed.