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Reconciliations

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  • #24837

    I’Anson
    Participant

    Does it make sense to search for and eliminate non-value added steps within a reconciliations process in financial services ? Shouldn’t the whole process of reconciliations be treated as NVA and eliminated ?

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    #59594

    Robert S
    Member

    Your base assumption that ALL NVA can be eliminated is not correct. There is certainly an optimum level of NVA an organization should have but it will never be zero. So, yes, you can analyse the reconciliation process and likely remove some waste, however a company must reconcile its accounting records or greater defects will occur.

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    #59598

    Lisa
    Participant

    One could also consider Reconciliations a control on the processes that the transactions in the ledger represent. The more entries there are to reconcile or if an account is out of balance, the more opportunity for improvement you have in the operational transactions. I have back tracked from GLs that were out of balance to A/P and A/R process projects for good ROI. When the error was gone those items were gone.
    I also agree with what Robert said. You can take some waste out of the Reconciliation process as well.
    And yes – Reconciliations are inherently NVA (or BVA if SOX requirement). However you can’t just get rid of the Reconciliation. You have to take a look at the lines that are showing up that cause the need for reconciliation and see if you can get rid of those. 

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    #59612

    Adrisa
    Participant

     •The maintenance and timeous actioning of differences shown on a reconciliation have a direct influence on profitability. Recons are not only a health check but a reflection of serious problems. Recons and the elimination of waste / improvement of the process must be end-to-end – starting with the initial capturing and processing of transactions. The Reconciliations Champions that ensures on a daily basis that the main account are clean must also identify where the problems / waste occurs and must immediately with the team rectify the problems / elimianate the waste. Once the incumbent and departments take ownership of their process, SLA’s etc the elimination of waste in the process becomes a shared ongoing initiatives.

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