Bank Reconciliations – Case Study

Midhun Menon P

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HLB HAMT - Accounting Firm in UAE

Phone:- +971 4 327 7775
Mobile:- +971 52 830 7998
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com

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    Regardless of their size or location, most financial organizations manually match transactions and submit journals to complete bank reconciliations. Problems with bank reconciliation are not influenced by the size of the organization, yet numerous mid-sized businesses have trouble balancing their books. Reconciliation is challenging for them mostly because of the variety of accounts and institutions they work with, as well as the different payment methods and time zones. The same holds true for the bills. Numerous human errors are caused by the volume of received purchase orders and the number of entries in each order that need to be reconciled.

    The Client:- The client is a financial institution based in Dubai, UAE

    Challenges Faced

     For our client, the clients and cash flows are complex & tedious as it is from various sources and banks. The staff had to spend longer work hours on the manual reconciliation, which was a tedious, time-consuming, monotonous task. It was also prone to human errors creeping in during the manual entry during the reconciliation process. Errors such as date & time discrepancies, and duplicate entries were also a huge issue, this of course led to delays in work and in one case almost led to a loss of reputation with a client. There were also multiple transactions to handle on a single invoice, which led to further delays.

    What We Offered

    Finding information about the funds received and spent to balance the final figures is made possible by automating reconciliation. By comparing payment information with bank data, RPA helps to automate this procedure. The accounts are said to be reconciled if the details line up. When there are differences in the data, RPA sends the records back for additional verification.

    These are the major features of the project we did for the client:

    • Retrieval of Bank statements: Automation to create reports and download bank statements, and to securely log into your online banking platform.
    • Transaction reconciliation: The bots sign into your desktop or web-based ERP/POS and compare the information in the bank/credit card statements to the transactions in your ERP/POS.
    • Verify transactions: A spreadsheet’s Y/N designation can be used to view the status of reconciliation.
    • Share reconciliation report: Email a reconciliation report to your accounting team each day, marking any unreconciled transactions as needing further investigation.

    How the Client Benefitted

     Month-end reporting in real time

    • The accounting team can promptly present correct financial statements to the firm’s leadership by using automated bank reconciliation rather than the traditional procedure, which can take an average company 12–24 days to complete.

    94% less time spent on human work

    • Manual bank reconciliation can take up to three hours of an employee’s time per day if it is done every day. The employee will only need to spend ten minutes examining unposted transactions thanks to automation.

     

     

     

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    Organizational Consultancy in UAE

    Raghunath. T, Director

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    HLB HAMT - Accounting Firm in UAE

    Phone:- +971 4 327 7775
    Mobile:- +971 55 807 4568
    WhatsApp:- +971 56 219 1607
    Email:- dubai@hlbhamt.com

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      Challenge

      • The company ‘s Finance department was unable to meet requirements of user departments, and was perceived to be too slow, despite a team of 50 employees at the HO and about 100 employees in their branches
      • The Board felt that this department’s functioning would be a hindrance for the company’s growth plans

      Work done and Impact

      • Analyzed the department structure, workflows and processes – in line with the set growth objectives
      • Recommended realignment of workflows, and decentralization of the Finance department.
      • Helped to redefine the Authority Matrix and introduced review systems to ensure that the decentralized structure works effectively.
      • Identified and recommended areas of automation which enabled savings in manpower costs yet improved efficiency and controls

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      Due Diligence in UAE

      Raghunath. T, Director

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      HLB HAMT - Accounting Firm in UAE

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        Challenge

        • Our client was evaluating an attractive business proposition to invest in a specialized product trading and technical services provider in the UAE. The client had industry knowledge and had a favorable view of the target company but wanted to determine the right transaction price for the acquisition.

        Work done and Impact

          • Our team of internal auditors and analysts conducted a detailed due diligence of the target company. This include in-depths analysis of their numbers as well as review of internal systems and controls

        Action / Impact:

        Were able to identify some key issues such as excessive dependencies of some customers and a steady marginal decline in revenue from their more profitable products.

        There were also some accounting practices relating to provisions were incorrectly followed, as also some intercompany loans which were irregular.

        The report helped our client to assess the projected business better to make a more informed valuation decision. They were also able to address compliance issues by making process changes after they completed the acquisition

         

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        Organizational Consultancy UAE

        Raghunath. T, Director

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        HLB HAMT - Accounting Firm in UAE

        Phone:- +971 4 327 7775
        Mobile:- +971 55 807 4568
        WhatsApp:- +971 56 219 1607
        Email:- dubai@hlbhamt.com

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          Challenge

          • The company’s owners were unable to get the desired results from the CEO who was long associated with the company externally but was in the CEO role only for a short period
          • There were a few senior employees who were not performing, but the owners could not really determine the causes
          • Employees at lower levels were lacking motivation

          Work done and Impact

          • We conducted detailed meetings with the Management and key employees across different levels to understand their expectations and concerns.
          • We analyzed various internal processes and the authority delegation followed, and important business metrics.
          • Based on the above, we were able to recommend an effective new structure that eliminated the need for a few employees who were actually a hindrance to the system
          • The company obtained savings in costs, the owners found it easier to implement their plans and the employees down the line were more motivated and able to work more productively

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          Internal Audit Services in UAE

          Raghunath. T, Director

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          HLB HAMT - Accounting Firm in UAE

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            Challenge

            • No practice of periodic evaluation of suppliers’ performance.

            Work done and Impact

            • Ensured the implementation of an objective supplier evaluation process

            Action / Impact:

            Were able to understand that there was a need to replace some suppliers and balance purchases across others; about 6 new suppliers were identified resulting in improved costs, lead times and QC compliance

            Challenge

            • Poor stock controls and inadequate review of goods on the production floor

            Work done and Impact

            • In-depth analysis of stock was done across different stages of production – Raw Material  / Work In Progress / Finished Goods

            Action / Impact:

            Reduction in the value of items in the WIP warehouse by approx. 33% over a 6-month period without loss in production output

             

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            Internal Audit Management UAE

            Raghunath. T, Director

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            HLB HAMT - Accounting Firm in UAE

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              Challenge

              • Lack of visibility on financials and unexpected drops in results due to old stocks and sticky receivables

              Work done and Impact

              • Root cause analysis was done. Primary reasons were lack of strong internal reviews and weak provisioning processes followed for stock and receivables. The existing provisioning processes for both debtors and stock were not aligned to reality. The age of the receivable was not adequately scrutinized and provision for stocks were not aligned to realizable discounted prices.
              • Action / Impact:

                More realistic provisioning criteria were applied and a one-time hit in numbers was consciously taken. Related KPIs were also made and integrated with performance reviews. Subsequently, this resulted in greater internal sensitization among operating teams and also lesser surprises.

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              Workload Analysis in UAE

              Raghunath.T, Director

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              HLB HAMT - Accounting Firm in UAE

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                Challenge

                • A company that was into large scale catering was finding it difficult to assess their employee adequacy
                • The senior management believed that there was excess manpower – yet, managers and employees on the ground perceived a manpower shortage
                • There were also consistently high overtime payouts

                Work done and Impact

                • Using primary and secondary sources, we obtained relevant industry data on Employee to Customer ratios across similar companies
                • We analyzed the overtime costs and staff requests at department level, and found that major issues were in the Kitchen
                • Our consultants carried out a Time and Motion study, covering all shifts of the kitchen for a period of 4 days and analyzed areas of high staff requirement
                • We found that there were no major instances of slackness among employees
                • However, on further analysis, we were able to pin-point certain specific items in the menus offered that were very high on cooking / preparation time
                • We checked the criticality of these menu items to customer requirements with the concerned operating teams. With their feedback, we concluded that by changing some specific menu items, we could reduce the cooking time and hence staff workload and overtime significantly

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                Human Resources Optimization in UAE

                Raghunath.T, Director

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                HLB HAMT - Accounting Firm in UAE

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                  Challenge

                  A client company who was into project sales across the region had approached us with the following concerns:

                  • They were unsure if they were overstaffed (i.e., was HR cost as % to sales was too high?)
                  • They were not clear how to downsize if business drops
                  • Were they paying the right salaries?

                  Work done and Impact

                  • We assessed manpower utilization, and determined optimal manpower based on current projects, planned handovers and the order pipeline
                  • We advised them to restructure their departments and realigned project cost calculations to get better cost estimates
                  • We built business case scenarios for different situations to estimate the optimal headcount in each situation, thus enabling the company to take the correctly plan manpower
                  • We benchmarked salaries across relevant competitors to correctly know in which positions where corrections were needed

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                  Workflows and Standard Operating Procedures in UAE

                  Raghunath.T, Director

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                  HLB HAMT - Accounting Firm in UAE

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                    Challenge

                    A manufacturing sector client with whom we were associated was facing regular issues of material non-availability despite the Purchase Head being a seasoned employee who had excellent knowledge of products and suppliers

                    All departments were clear that it was the Purchase team which was at fault for the issue, but there was no apparent solution

                    Work done and Impact

                    • On closer analysis of the internal processes, we found that the root cause was that there were too many tasks that the purchase head was doing by himself due to “confidentiality” issues although these were not of any strategic significance.
                    • The rest of the team was usually engaged in very trivial tasks of little value addition.
                    • The consultants proposed a new workflow and delegation of authority structure in the department, with proper controls. This ensured better work flows and accountability at all levels, and improved material availability resulting in greater order fulfillment rate, reduced emergency purchases etc.
                    • The company’s dependence on the Purchase Head was also reduced, thus benefiting business continuity

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                    Transformation & Change Management in UAE

                    Raghunath.T, Director

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                    HLB HAMT - Accounting Firm in UAE

                    Phone:- +971 4 327 7775
                    Mobile:- +971 55 807 4568
                    WhatsApp:- +971 56 219 1607
                    Email:- dubai@hlbhamt.com

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                      Challenge

                      • A locally owned family enterprise that was successfully running for over 30 years in the UAE had appointed a new CEO
                      • The company’s owners were unable to get the desired results from the CEO despite his excellent past track record and old acquaintance with the owners
                      • There were a few senior employees who were not performing, but the owners could not really determine the causes
                      • Employees at lower levels were lacking motivation

                      Work done and Impact

                      • We conducted detailed meetings with the Management and key employees across different levels to understand their expectations and concerns.
                      • We analyzed various internal processes and the authority delegation followed, and important business metrics.
                      • Based on the above, we were able to recommend an effective new structure that eliminated the need for a few employees who were actually a hindrance to the system
                      • The company obtained savings in costs, the owners found it easier to implement their plans and the employees down the line were more motivated and able to work more productively

                      Get in touch

                      Whatever your question our team will point you in the right direction

                      Start the conversation
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