How to Automate Bank Reconciliation For Your Startup

Emilie Pires
5 min read
How to Automate Bank Reconciliation For Your Startup

One of the most time-consuming and tedious financial tasks is bank reconciliations. Each month, your startup’s finance team must go through every bank account and reconcile that each transaction has been accounted for and is recorded accurately. With highlighters, spreadsheets, lots of time, and a careful eye, this task will get done. But, it costs your team time and your startup money. What if there was a better way?

That better way is to automate your bank reconciliation process. With advanced technology, you can automate the reconciliation process and save your team time, money, and effort. 

What is Bank Reconciliation?

Bank reconciliation is the process of comparing your company’s bank account statement to your accounting records for the same period of time to ensure each transaction has been accounted for and is recorded accurately. The bank reconciliation process requires matching transactions between the bank statements and accounting records to identify and fix any discrepancies, and ensure all transactions are accounted for across all records. Reconciliation is a standard accounting process that is typically done each month during the monthly close process. 

See also: 4 Reasons Your Startup Should Use An Outsourced Bookkeeping Service

What is Automated Bank Reconciliation?

Automated bank reconciliation leverages technology or software to replace the manual task of monitoring and comparing a company’s bank statements to its accounting records.

Traditionally, the bank reconciliation process is completed by humans, making it repetitive and error-prone. Using technology or bank reconciliation software powered by robotic process automation (RPA), you can automate the bank reconciliation process, requiring minimal human supervision and manual intervention. This automated process allows businesses to increase speed and accuracy, and eliminate a tiresome bookkeeping task, allowing your finance department to focus on other, more important tasks.

See also: 5 Tips to Streamline The Month End Close For Your Startup

How Bank Reconciliation Protects Your Business

Regular account reconciliation, which is typically part of your financial close process, is a time-consuming but important step to maintaining clear, accurate, and audit-ready finances for your startup. 

Good Financial Management and Error Avoidance

At the core, bank reconciliation is simply good financial management. Regular reconciliations protect your startup from minor errors such as overdraft fees and duplicate charges, and help identify larger issues like fraud before they spiral out of control. 

Reduces Risk

When it comes to money and business finances, there’s a lot at stake. Regular reconciliation reduces your company's risk for human error and inaccuracies.

During the reconciliation process, your bookkeeper or RPA technology reviews all bank transactions to make sure they match from one record to another. If something is off, your bookkeeper will either fix it or track it using journal entries. This creates an audit trail that’s easy to follow and reduces the risk that you might be out of compliance with any financial regulations. The more complex your finances get, the more important bank reconciliation is for your startup. 

Prevents Fraud

Regular bank reconciliations prevent the worst-case scenario: fraud. Whether because of an understandable mistake or on purpose, fraud is never good for business.

Fraud might look like:

  • Unexpected or missing withdrawals and deposits
  • Unauthorized checks
  • Duplicate checks or transactions
  • Overpaying an employee

Most types of fraud can be caught during reconciliation, which ensures you’re not spending money you don’t intend to and keeps your startup safe from IRS audits.

See also: How To Make Sure Your Startup is Audit Ready (And What To Do If You’re Audited)

Improves Cash Management

Cash management and cash flow are critical parts of operating a startup. Without good cash flow management, you might try to invest in new software or run a marketing campaign that your startup can’t actually afford. Reconciling your accounts monthly ensures that you have an accurate understanding of how much money your startup has at its disposal at any given time.

Optimizes Internal Processes

Bank reconciliation can not only reveal financial errors and fraud, it can also reveal patterns that speak to your internal processes. If the same error pops up month after month in the bank account reconciliation process, you know there’s an internal process that can be optimized to function better and make your startup more efficient.

Saves Time and Money

While the bank reconciliation process is tedious and can be time-consuming, in the long run, it can actually save your startup or small business time and money. By reconciling regularly, you ensure that your bank statement and bank charges are all accurate in the moment. This eliminates the need to go back and solve complicated problems at the end of the year. 

But, there’s an even better way. Give your startup the capability to save even more time with automatic bank reconciliation.

How Zeni Automates Bank Reconciliation

Zeni is a full-service finance firm providing intelligent bookkeeping, accounting, tax, and CFO services to venture backed startups across the U.S. Startups trust Zeni to automatically manage every aspect of their finances—from bank reconciliations, to bill pay and invoicing, monthly reporting, and more for a flat monthly fee.

Automation is core to Zeni. We leverage a seamless blend of artificial intelligence and human finance experts to improve the speed and accuracy of bank reconciliations, data entry, transaction categorization, month-end reporting, and more. What once took hours of dedicated human resources now takes only a few minutes.

Because of this, Zeni performs daily bookkeeping, meaning your startup’s incomings and outgoings are updated and reconciled each day (not just at month end). This information is available in real-time, 24/7 via your Zeni Dashboard.

The Zeni Dashboard displays real-time financial data in an intuitive, actionable way. Reports highlight burn rate, runway and cash zero date; Total cash balance and credit card balance across every account; Operating expenses and top expenses; Revenues, including cost of sales; Cash in and cash out; and more.

For the first time, founders can see exactly how their startup’s financial operations are performing in real-time, access clear insights and transaction-level data supporting the high-level reports, and use this information to course correct as issues arise.

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