Corporate Account Reconciliation: How a Startup Can Save Its Engineering Director Hours per Week
It is no secret that hardware-centric startups grow rapidly, but that comes with challenges. Processes change constantly, things break all the time, and when you raise a Series A or Series B round of funding, you face many more problems to solve—all while trying not to let your headcount grow too quickly.
At this stage in the life of a startup, it is essential that all departments—including engineering, accounting, finance, and procurement—work together closely and efficiently to reduce costs and boost productivity.
Corporate account reconciliation is vital in this respect: it helps ensure that all purchases made by each department are accurately recorded in their respective accounts and provides visibility into company spending patterns.
When done correctly, corporate account reconciliation can save engineering directors hours per week by allowing them to focus on the work they enjoy most: being an engineer!
In addition to saving time for engineering directors, doing corporate account reconciliation correctly also helps ensure that accounting teams know precisely their account balance at any given time so they don't run out unexpectedly.
So, What Does Corporate Account Reconciliation Mean?
Corporate account reconciliation is a critical accounting process used by companies to balance their general ledger accounts with their bank and credit card statements. Depending on the account type, it's also known as bank account reconciliation or credit card reconciliation.
Corporate account reconciliation provides internal and external stakeholders with a higher level of confidence that the company's books are accurate. It helps ensure that businesses can adequately track how much money they're making (or losing) from sales and other activities.
A company must regularly reconcile all accounts, including bank and corporate card accounts. The timing largely depends on the size and complexity of the company's operations. Corporate account reconciliation is not just an internal process; you must also complete it on time. Only then can the external stakeholders, like investors, have confidence in the accuracy of the financial information presented by companies as part of the annual expense report or other financial documents.
How does Corporate Account Reconciliation Work?
If you're new to accounting or need a refresher, here's the gist: the general ledger is where companies keep track of all their financial transactions. It includes things like sales, purchases, and deposits. However, when a company pays for goods or services using cash or checks (as opposed to charging it on a credit card), this transaction doesn't technically happen within your general ledger system—it happens at another point when someone hands you money for something.
This creates an "outstanding claim" against your business and needs reconciliation before entering into the general ledger system so that everything balances out properly at the end of every month (or quarter).
What are the Key Benefits of Corporate Account Reconciliation?
Corporate account reconciliation is a process that can save your business a lot of money and headaches. Here's why:
Increases accuracy in accounting records and financial statements
Account reconciliations are an essential part of the bookkeeping process. It's necessary to keep accurate records so that you don't miss any payments or overpayments affecting your cash flow. A sound accounting system will help you reconcile your accounts and ensure that everything is up to date and accurate.
Increases reliability in identifying revenue, expense, asset, and liability balances
An accurate accounting system will help you identify potential errors in your accounting records before they have time to add up to large amounts of money that could have been saved or earned by keeping track of these things right away.
Reduces the possibility of errors
Suppose there are duplicate payments on credit card transactions or other transactions within your company. It could lead to many problems when those funds need to be tracked down later down the line because there was a poor entry record.
Some people might try to fix this by manually reconciling their accounts every month, but that can take up a lot of time and effort. If you have an automated system in place for recording all these transactions, then this problem should never come up in the first place!
Increases cash flow
When you have more money coming in than going out each month (or quarter), then you're able to invest more into your company's growth with less worry about paying interest on loans or having to worry about overdraft fees if things go south financially.
Improves management reporting capabilities
Account reconciliation also helps improve management reporting capabilities because it allows for better control over expenses and assets within an organization's budgeting process. When a payment or investment is recorded accurately into financial records through accurate reconciliations, it will be easier for managers to report on them later on down the road.
Account Reconciliation Can Save Time
It's no secret that account reconciliation is a time-consuming process. But did you know that it could also be a dangerous one?
If you're not careful, you could miss an invoice or two—or worse, your financials could show inaccurate numbers. That's why we think it's important to automate this process as much as possible.
When you automate reconciling accounts, you don't have to worry about whether or not you missed anything or if there are any discrepancies between what your ERP says and the actual invoice. Instead of worrying about procurement and other accounting tasks, you can focus on building great products.
Impact of Corporate Account Reconciliation on Hardware-Centric and Fast-Growing Startups
Account Reconciliation is a critical process for hardware-centric startups at scale. It's one of the essential steps of ensuring that all financial data is accurate and up to date, which helps prevent costly mistakes and missed opportunities.
For example, it can help avoid situations where a company orders too many parts or forgets to pay their bills on time, leading to lost revenue or penalties.
Account Reconciliation also has immense potential to save time across organizations since it consolidates all accounts into one place, making them easy to access and manage from anywhere with an internet connection - including laptops, smartphones, and tablets.
This allows employees from different departments (such as engineering & finance) who may not normally communicate much during regular business hours because of geographic separation or different time zones to collaborate more effectively by sharing insights into their respective areas of expertise.
They also simultaneously improve decision-making processes across departments by providing insight into how specific decisions affect other aspects of operations like cash flow management, impacting future growth projections.
How ControlHub can Help Streamline your Account Reconciliation Process
As a Director of Engineering, you have a lot on your plate. You're often the first line of defense to ensure that the company stays on track with its development goals.
And as the headcount grows, so does the workload—which means there's never enough time in the day to meet all your responsibilities.
We've created a solution that will help you manage procurement across all departments. Our accounting software is customizable to work with your unique needs and processes, so you can spend more time focusing on what matters most: building out your team and making sure they have everything they need to succeed.
We know that every company has its unique way of doing things, so we offer our clients flexible solutions tailored to their needs. With ControlHub, you'll be able to streamline your account reconciliation process by automating manual tasks and optimizing resources across all departments within your organization.
Instead of spending hours looking through purchase orders or remembering who ordered what, you can check our reconciliation software and see whether or not another department has approved something before approving it yourself.
Explore the benefits of Account Reconciliation
The corporate account reconciliation process is critical in managing operating cash flow. Organizing and automating the reconciliation process translates into cost savings, improved control of your enterprise spend, and a significant reduction of errors.
It also can bring significant benefits to finance, procurement, and engineering teams.
With the above solution in place and a small investment in technology or outsourcing, Hardware-centric, fast-growing startups could drastically reduce the time spent on this critical accounting task and free up valuable time for other activities. Want to reconcile your business accounts? Contact us today to find out how we can help!