Are You Reconciling Your Funds the Right Way?

How to implement a complete reconciliation program that will prevent error and fraud in your HCM workflow

4 Tenets of Reconciliation

Reconciliation is a critical foundation of managing customer funds in HCM. In building a client funds reconciliation program, there are key principles you don't want to ignore. Keeping these tenets in mind will help you build a strong program free of blind spots and vulnerabilities:

1. Bank reconciliation ≠ Reconciliation. These two similar terms aren't the same thing. Bank reconciliation (ensuring that your records match those of the bank's) is only one part of broader client funds management, which includes important ledger and subledger reconciliations as well.

2. "Close enough" is not good enough. Settling for numbers that are close but imprecise is not an acceptable workflow, and it can lead to serious consequences.

3. You're not reconciled until you're 100% reconciled. Every penny must be accounted for in order to avoid troublesome errors and ethical breaches.

4. There's no substitute for DAILY reconciliation.

Identifying Risks

It's crucial for HCM providers to first identify their risks in order to take the right steps to avoid and mitigate them. Problematic issues may take the form of unauthorized bank transactions, either through human error or fraud, or they may simply be unexpected events. Some of these might include returned payments, insufficient funds, or processing errors. Another aspect that shouldn't be overlooked is client ledgers--inaccuracies, discrepancies and timing issues can lead to big problems for your company and for your clients.

Risk Mitigation

Thankfully, there are actions and tools to help you stay on top of these ongoing risks. In reconciling bank discrepancies, timeliness, accuracy, and completeness are crucial. Ledger reconciliation should be be done daily, and not only at the top level but within subledgers as well. Don't let any error or inaccuracy go unnoticed. Tools like exception reporting can help you find transactions that haven't cleared or funds that don't match up with tax liabilities. Details incorporated into the workflow, such as ensuring that your reconciliation system blocks users from modifying opening bank balances, can increase accuracy while reducing unethical activity.

Finlee: Find the Difference

It's a big task to keep funds 100% reconciled every day, but this is a must for HCM providers to handle client funds reliably, safely, and ethically. The good news is that your employees don't have to do it all manually. Finlee is a custom-built solution designed specifically for the reconciliation needs of HCM providers. You don't have to struggle to pinpoint all the errors and discrepancies that arise--Finlee will automatically find your differences for you. With this all-in-one application, you can easily identify and address any reconciliation issues right away, every day. It's a clean, simple, reliable way to do reconciliation right.

Interested in learning more? Book a free demo to walk through what Finlee does and how it can improve your workflow.