Strategic acquisition: KPIs and leading practices for account reconciliation

While undergoing a strategic acquisition, there’s a lot to get in order. And when it comes to account reconciliations, here are the goals we think are most important for your organization amidst this strategic change, meaningful KPIs to track progress, and leading practices to follow.

Goals for your account reconciliations

1. Efficiency gains: Adopting the best practices and tools from both entities to reduce time and effort.
2. Error reduction: Unifying your data with technology to reduce discrepancies.
3. Cost savings: Eliminating overlaps in tools and systems to save on software licensing, maintenance, and training.
4. Enhanced reporting: Leaning on technology for real-time data and dashboarding that will aid in strategic decision-making.
5. Scalability: Harmonizing processes to easily adapt to future growth, acquisitions, or changes in financial structures.

Meaningful KPIs to track

• Reconciliation time: The average time taken to complete account reconciliations post-integration compared to pre-integration benchmarks.
• Discrepancy rates: The percentage of accounts with discrepancies or mismatches during the reconciliation process.
• Manual intervention rate: The percentage of account reconciliations that require manual intervention or adjustments.
• Cost per reconciliation: The total cost (including software, labor, and overheads) associated with reconciling each account.

Leading practices

1. Introduce materiality thresholds: Be strategic to save time. Set thresholds that prevent time spent on negligible discrepancies.
2. Optimize risk rankings and frequencies: Distribute tasks evenly by adjusting reconciliation frequencies based on the risk profile of each account. This prevents bottlenecks during peak times.
3. Focus on reconciliation activities: Spend time considering process improvements, but still prioritize the core tasks of reconciliation and ensure the team remains focused on accuracy.
4. Automate where possible: Embrace digital solutions that can automate repetitive tasks, like in matching transactions, identifying discrepancies, and auto-clearing certain reconciliations based on set criteria.
5. Standardize templates and formats: Employ a consistent format or template across all reconciliations for ease of review and error reduction.

For more leading practices on account reconciliation, check out 7 critical areas of your account reconciliation policy.