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March 11, 2021 10:00AM

Automating Bank Reconciliations and Recording Cash Transactions

As all accountants have come to know, the manual bank reconciliation process can take a lot more time than expected or planned for. This is especially true if issues arise or if unknown transactions present themselves on the general ledger (GL) or bank statement. The additional time needed to research, record, and reconcile these transactions can cause delays in finalizing the bank rec. This can snowball further, such as causing delay in issuing accurate reports to both internal and external stakeholders.

Sometimes new transactions present themselves on the bank statements and this is what initiates recording them in the GL. On the disbursement side, this might include bank fees, mortgages, and debt payments with variable interest rates. On the receipt side, tenants may just wire money directly to your account. There is no other way to know that these transactions occurred until they occurred and show up on the bank statement. It’s common practice to have someone review the bank statements daily and record these transactions, but we have seen that is not always a realistic expectation.

We recently did a survey and found that 64% of property management firms surveyed don’t have a treasury management system in place to handle these scenarios. That’s a surprising percentage since not having a treasury management system can hinder the ability to report on a real-time cash position and reconcile cash expediently.

Our survey also found that 47% of real estate investment firms surveyed hold more than 200 bank accounts each. In a best-case scenario, if an account takes 30 minutes to reconcile, that’s still 100 hours, or more, a month involved to perform these reconciliations manually.

If you are using Yardi, we have two great solutions to offer that will help alleviate these pain points.

Yardi Automatic Bank Reconciliation Solution

The Yard Automatic Bank Reconciliation (ABR) module has been gaining popularity among our clients for a reason… It saves them a ton of time!

From a high level, this is how ABR works:

  1. A BAI2 file is provided from your banking institution.
  2. The file is uploaded to Yardi and processed.
  3. Transactions that match on the general ledger to the BAI2 file are marked as reconciled on the bank reconciliation screen.

While this may not always reconcile all transactions, it targets reconciling about 50% to 85% with the default configuration. We have been working with clients to further optimize this and have seen accounts become fully reconciled after the feature runs. We also work with clients to streamline the process: the bank remits the file to an SFTP site and then Yardi grabs the file to make it as seamless and hands-off as possible. If SFTP is not an option, our bots can also download the file and process it in Yardi for you.

This ABR feature is included for all clients with G/L Posting Utilities Plug-In 7.2 and above.

REdirect Robotic Process Automation

Another great way to resolve these reconciliation pain points is with Robotic Process Automation (RPA).

Currently, our bots are helping clients save time by:

  1. Obtaining and reading bank statements
  2. Recording and/or reconciling transactions in the system
  3. Reporting on the results and providing an audit trail of the performed tasks

We schedule our bots to deploy regularly (sometimes daily). They are able to securely log in to online bank portals and scrape or download available files for key information. From this information, the trained software bots execute accordingly, recording and reconciling based on the predefined rule sets we established through implementation.

We can have the bots prepare unposted batches, or go all the way and post them for us. During implementation we determine the exact handoff from bot to person to ensure proper internal controls stay in place. Lastly, the bot reports on the completed tasks and any errors it may have encountered. This is very helpful because we often design control processes for users to review the bots’ work. The bots can work daily (even on weekends) and record/reconcile these transactions as they occur, giving us the most up-to-date cash position as possible.

To Sum Up

Regular bank reconciliations and recording cash transactions can be tedious and time consuming. It can be tempting to just hope that things work out when it’s time to reconcile or spend excessive time at month end to meet the deadline.

With the technology available today, bank reconciliations and recording cash transactions can be easily simplified and are a ripe opportunity to save time and resources. The time saved can allow you to reallocate resources to other value-add aspects of your business.

It’s also worth noting that here at REdirect we take a holistic approach to finding the best solution that works for you. This doesn’t mean using technology just because it’s new and exciting. It means putting the clients’ needs first and then working backward to achieve the best results possible with the tools at our disposal.

We do this through deploying combinations of solutions. Often, we begin with making sure we are leveraging the built-in features of Yardi that are available to us. We also look to optimize business processes to follow industry best practices and make them as efficient and effective as possible. When there are still repetitive, recurring, and rule-based tasks, RPA and more custom solutions become a great candidate to use.

For more information about automating bank reconciliations, deploying RPA, or any other component of real estate management, contact us, and we’ll put our expertise to work for you.

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Jonathan Bias
About the Author

Jonathan Bias

Jonathan joins REdirect with a background in both Yardi consulting and public accounting, having spent time working at Yardi while in graduate school. While at Yardi, based in the Long Island office, Jonathan was responsible for Residential Implementations and the Concierge module, which resides in the Leasing pad and Rent Café environments. …