Reconciliation Software Buyers Guide

This detailed guide will help you find and buy the right reconciliation software for you and your business.

Last Updated on November 09, 2023

Accurate accounting is one of the most critical objectives for a business. It provides a realistic snapshot of the company's financial position by summarizing assets and highlighting financial risks. And of course, proper accounting also has implications for regulatory compliance. Reconciliation software verifies that accounting efforts are complete and correct, and that they conform to industry standards and legal requirements.

This guide will explain how reconciliation software helps businesses and nonprofit organizations verify transactions and prepare accurate accounting documents, such as balance sheets and income statements.

Here's what we'll cover:

• What is reconciliation software?

• What are common features of reconciliation software?

• What type of buyer are you?

• What are the benefits and potential issues reconciliation software?

• What should you consider before purchasing reconciliation software?

• What are the market trends of reconciliation software?

What is reconciliation software?

Reconciliation software automates the account reconciliation process to create accurate, high-quality financial statements. It gives accountants a streamlined way to verify that their balance sheets are correct, appropriate, and compliant. The software receives information from banking institutions and compares it against internal records. Discrepancies are flagged for accountants to review and reconcile. This saves time and improves the accuracy of balance sheets, income statements, and related documents.

What are common features of reconciliation software?

Many reconciliation software platforms are designed to support a specific industry, but most offer the following common features:

Bank reconciliation	Compare accounting and other financial records with corresponding bank statements.
Financial reporting	Generate income statements and balance sheets to gauge performance and financial position.
Document management	Upload, store, and share financial documents in a common location where stakeholders can access them on premise or in the cloud. Secure these documents using industry-standard security features.
ERP integration	Connect reconciliation software with existing enterprise resource planning (ERP) systems through simple application programming interfaces (APIs).
Multiple currencies	Make calculations using various international currency systems. Incorporate past exchange rates for the most realistic financial picture over time.
Data importing and exporting	Exchange information and reports to and from the reconciliation software. Capture accounting data from other applications. Export reconciliation data and reports to other systems.
Exception management	Find, explain, and address financial anomalies that fall outside of expected values.

What type of buyer are you?

Choosing the right reconciliation software solutions starts with identifying what kind of buyer you are. Most buyers fall into one of the following categories:

Small businesses: Most organizations with fewer than 100 employees are well served by purchasing reconciliation solutions that are part of a larger suite of accounting software. This integrated approach affordably centralizes most accounting processes such as budgeting, forecasting, billing, invoicing, and payroll.

Midsize and growing businesses: Many growing businesses find they are ready to upgrade their accounting platform to a more advanced solution. One affordable alternative to replacing an entire accounting platform is integrating specialized reconciliation software as a supplement to your existing accounting architecture. This approach provides better compliance tools without the expense of changing all your accounting processes.

Enterprises: Publicly traded companies and multinational firms often have complex compliance requirements. Best-of-breed reconciliation platforms offer tailor-made solutions to fit these needs. Alternatively, organizations with over 1,000 employees may benefit from a full-featured accounting or financial reporting platform that includes advanced reconciliation tools. Finally, it's worth considering platforms that integrate with enterprise resource planning (ERP) solutions.

Nonprofit organizations: Nonprofits and not-for-profit organizations must follow strict reporting compliance guidelines. Some reconciliation tools are designed to help. For instance, they can register unusual "income" sources such as gifts of stock or durable assets that are harder to accommodate using standard reconciliation or accounting solutions.

What are the benefits and potential issues reconciliation software?

Reconciliation software is designed to offer the following key benefits over general accounting software:

• Create specialized financial documents: Export balance sheets and income statements that follow specialized formats based on industry, region, organization type, and many other variables.

• Import real-time data from banking institutions: Compare company financial records against digital bank statements to spot mistakes, oversights, and irregularities. This feature provides extremely accurate information for superior bank reconciliation reports.>

Reconciliation software buyers may encounter the following issues during deployment:

• Changing banks may complicate reconciliation efforts: Reconciliation software typically imports bank data, but adding or switching financial institutions can delay this process. Finding a platform with good customer service can streamline financial service transitions.

• Setup can be tricky: Some platforms offer deeper report customization options. This added flexibility is useful, but some reviewers report that the process can be difficult at times. The best ways to overcome this potential obstacle are to select platforms with extensive documentation and support, and to leave your team enough time to set up the software. Overall, buyers seem to agree that the benefits of customized reports are worth the extra effort.

What should you consider before purchasing reconciliation software?

Keep the following considerations in mind while choosing reconciliation software:

• Select reconciliation software that addresses unique industry needs. For instance, nonprofit organizations may need a way to reconcile grants and donations. Manufacturers may need to report depreciation of fixed assets. If your industry has specialized reconciliation and reporting needs, look for a solution built to accommodate them.

• Companies can deploy reconciliation software using on-premise and cloud-based systems. Cloud options often have lower up-front costs; however, the costs of both deployment options eventually converge. Also, modern cloud-based systems often offer security that is as good as most on-premise solutions, or better.

What are the market trends of reconciliation software?

The following market trends are influencing the development of reconciliation software:

• The continuing rise of digital payments is increasing the complexity of banking reconciliation. With so many ways to make and receive payments, many companies are discovering that reconciliation is more complicated now than ever. Modern reconciliation software can accommodate a wider range of revenue and payment channels, which saves accountants lots of manual effort and time.

• Identity theft and banking fraud are becoming more prevalent and sophisticated. Reconciliation software is another line of defense against theft. Continually comparing bank transactions against known revenue and expenses detects irregularities immediately.