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Challenges You Will Face During the Reconciliation Process – And How to Solve Them

Image by Steve DiMatteo

The reconciliation process can seem like a never-ending blur of tedium and frustration, especially at the end of the month. Not only is it time-consuming, it is also frequently inaccurate, which can obscure or enable cases of accounting fraud.

Hence, despite the hours of work involved in account reconciliation, many finance professionals remain unhappy with results – especially if the reconciliation is done automatically. According to a survey, only 20% of finance professionals are satisfied with the closing process, and only 28% believe in the accuracy of the reporting data.

In this article, we’ll cover some challenges you might encounter during bank reconciliation or credit card reconciliation, so you get a better idea of how to address them. (If you want to skip the trouble of reconciling your own accounts, you can hire an experienced company like NextGen Accounting.)

Table of Contents

Introduction: Why is the Reconciliation Process So Frustrating?

Risks of Not Performing Reconciliation Properly

Common Challenges and Problems Faced in the Reconciliation Process


Introduction: Why is the Reconciliation Process So Frustrating?

To understand reconciliation challenges, we need to first understand why account reconciliation puts dread in the hearts of accountants everywhere. (We’re kidding. Just a little.)

Some of the major reasons are:

  • Manual reconciliation processes: Accounts payable teams must scour through bank account logs and paper credit card statements, which can result in many errors and is very time-consuming. According to a survey by Airbase, 38% of small and mid-size businesses spend over 25% of their time on manual tasks, while 11% spend over 50%.

  • Number of transactions: The number of transactions that take place each day only grows along with the company. Often, however, finance teams do not add new resources when needed.

  • Method of accounting: Some companies do accounting in a way that is unproductive or prone to error. For example, they might wait right till the end of the month, or post payments to their accounting software as soon as they are made.

Bear in mind that accountants can also receive fragmented data and incomplete information, which leads to guesswork, which leads to more missing information, errors, and larger problems.

Risks of Not Performing Reconciliation Properly

The reasons above can lead not only to inefficiencies, but much more serious issues, particularly for AP teams. Here are some issues that may arise from inaccurate reconciliations:

  • Fraud

  • Bankruptcy

  • Theft

  • Late fees

  • Missed payments

  • Incorrect tax returns

The right reconciliation process will allow you to nip problems in the bud before they spiral out of control.

Note that, in the US, businesses do not have as much protection under federal law as consumers in terms of bank accounts. Hence, it is crucial for businesses to catch suspicious or fraudulent activity early on – the bank may not cover errors or fraud in their account.

Common Challenges and Problems Faced in the Reconciliation Process

  • No Standardization

One of the most prominent issues in reconciliation, especially if done manually, is lack of standardization. If you are a global organization with various entities, your balance sheet reconciliation can become complicated.

The final reporting can contain issues due to different processes and procedures, and differing institutional knowledge and spreadsheet formats.

Furthermore, when balance sheet reconciliation is not standardized, compliance risk can significantly increase.

  • Not Factoring in Risk

Financial risk should be considered for every part of the reconciliation process.

A risk-based approach will both lessen the workload for F&A and decrease your company’s risk profile.

By assigning risk ratings, especially through automation, your reconciliation volume can lower by a large amount.

  • Oversights

Sometimes transactions such as an expense or the sale of a service are not added to the ledger, simply because they are forgotten about. This can be due to invoices getting mislaid or lost. Such oversights can be difficult to detect.

  • No Analysis of Historical Data and Trends

Trends and historical data should be utilized to drive your future decision-making and process improvement.

Close analytics can help management determine where bottlenecks are occurring and other manual reconciliation challenges that lead to delays.

  • Untimely/Missed Reconciliations

Reconciliations should be conducted daily or monthly to make sure that all account balances match and to clearly understand your financial position. If reconciliation is not done consistently, it becomes far more difficult to recall vital details should problems arise.

  • Manual Reconciliation

Manual reconciliation is not itself inherently a bad thing, but human error makes it unreliable.

It can be frustrating and time-consuming, and deadlines can be jeopardized because accounting teams are swamped with other high-priority tasks and activities.

Furthermore, a fragmented manual method increases your company’s risk profile, especially when it comes to formulae and custom macros. Note that, generally, the more human intervention via manual reconciliation, the greater the rate of error in reporting.


Watch out for the above issues in reconciliation in finance, and you’re more likely to have a smooth reconciliation process. The general answer, of course, to most of these comes down to two things: using automation such as Crush Errors to save time and avoid mistakes, and/or hiring the right accounting company for your needs.

NextGen Accounting gives you reliable bank reconciliation services and credit card reconciliation services, every day. If it doesn’t pass audit, we pay the fees.

Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC.

If you want reconciliation services that free up your accounting team, prove your books, and reduce credit card chargebacks, contact us today!

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