Bank Reconciliation Automation using RPA

“Robotic Process Automation, which fully removes the possibility of human error, can be used in industries of all sizes” 

Robotic Process Automation (RPA) is a software technology that helps us build, deploy and manage tasks with the help of ROBOT, which imitates the human behavior of interacting with the software world to carry out their fundamental daily needs. Robotic process automation streamlines procedures, which helps associations to turn more profitable, flexible, and responsive. It also increases employee satisfaction, engagement, and productivity by removing tiresome tasks from their workdays. 

The primary intention of RPA in the banking industry is to support processing the repetitious banking work. RPA helps banks & financial institutions increase their productivity by engaging clients in real-time and capitalizing on the immense advantages of robots. 

What is Reconciliation…? 

Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. Bank Reconciliation is an important process in accounting in which organizations compare their bank statements with the transactions that are recorded in their general ledger. Performing a bank reconciliation on statements helps businesses to minimize the possible errors in the list of transactions or bookkeeping. Bank Account Reconciliation is particularly useful for describing the indifference between two financial records or account balances. 

The ending balance of the customer version of the cash records is known as the book balance, while the bank's version is called the bank balance. There are high possibilities for creating differences between the two balances.  

When these differences are ignored, it leads to a huge dispute between the amount of cash that we think we would have and the amount the bank says we have in an account. The result could be an overdrawn bank account, bounced cheques, and overdraft fees. 

On the other hand, it is beneficial for bank officials to see if any customer cheques have bounced, or if any cheques issued were altered or even stolen and cashed without the customer’s knowledge. Thus, fraud detection is a key reason for completing a bank reconciliation.  

When there is an ongoing search for fraudulent transactions, it may be necessary to reconcile a bank account daily, to obtain an early warning of fraud. During the annual audit, the auditors will always examine the company's ending balance obtained from bank reconciliation as part of their testing procedures and hence proving the need to perform bank reconciliation. 

Hence, when such reconciliations are to be performed daily to ensure that there are no huge differences between the 2 types of balances, this reconciliation appears to be repetitive and time-consuming. This might also include the possibilities of major to minor human errors. At this point introducing RPA ensures that the reconciliation of bank statements is carried out much faster and effectively and therefore reducing the risk of human errors. 

The different types of account statement reconciliation tasks the software robots can perform are 

• Checking the loans approved in a business process between the clients and companies. 
• Keeping track of identical payments in a bank statement. 
• Comparing the receipts of debit and credit card transactions.
• Keeping track of the amount that gets credited into the customer’s account from various other sources.
• Reconciling the general ledger software. 
• Checking line items of the bank statement against the general ledger 
• Checking Month-end account statements matches and mismatches. 
• Validation of the payment receipts in the bank accounts. 

RPA uses numerous technologies that are capable of analyzing and evaluating a high volume of data and thereby performing repeatable tasks with zero room for error – quickly, accurately, and effectively. Essentially, an RPA works by extracting the relevant documents and data. This could be in the form of bank data files, register data files, and the like. It, then, performs a quick check to spot any discrepancies. 

Next, data is matched at the transaction level, and mismatches and discrepancies are identified. The RPA then investigates the reconciling items, fixes errors, the ad gets approvals. Once approved, the entries are finalized, and updates are closed. 

The Benefits of Automating Account Reconciliation 

RPA services are extremely beneficial for every company. Potentially, introducing RPA for bank reconciliation can save a lot of money and time. Apart from saving time and money, this reconciliation process leads to several other benefits, irrespective of the volume of data. 

•  The amount of time taken for manually checking and matching the customer account balances with the bank account balances is not only hectic work but also very time-consuming. Therefore, automating this entire mapping procedure can save a lot of time and money.
• There are several other important accounting tasks which the finance team of the company can work on rather than spending a lot of time doing the repetitive process of reconciliation, rather than wasting human resources company can focus on other essential activities of the bank. 
• Humans can never compete with the speed of the robots and hence bots can perform these repetitive tasks of reconciliation much faster and accurately to provide precise solutions. 
• When an individual is doing the accounting reconciliation, there are chances that there may be some minor errors, if not anything significant. And, mistakes can lead to drastic differences in the financial statement of the company, at the end of each fiscal period. Use of Automating Account Reconciliation ensures that there are no errors due to duplication of any entry. 
  Automating these account statement reconciliations can affect the future tasks that follow up after the reconciliation process in a new manner hence lining up things perfectly for future procedures.  
• Very precise and accurate invoicing: The output of reconciliation produces the most accurate result hence eliminating all possible human errors. This leads to accurate processing of upcoming tasks. E.g. It is usually frustrating for customers when they receive a notification of bill payments for those bills which have been already paid. This mismatch can be easily avoided by automatic invoicing after account reconciliation. Invoice is generated as soon as a sale contract has been completed and update the payment details of the customer. This also ensures that the bill is sent to only those customers who owe money to the company and avoids chaos among other trustworthy customers.  
• A simplified reporting: Once a bot is designed and set to perform the reconciliation at regular intervals, there are no chances that the scheduled bot may not run or stop working. This scheduled bot is accustomed to creating financial statements at desired time intervals and hence there are no chances that the finance team will miss an update. After reconciling the accounts accurately, the next reports that are generated using these accurate accounts are also perfect, hence eliminating any mismatches. The reports generated by these bots are accurate, flawless, and ready for submission to the government, board members of the company, and other relevant parties or higher authorities. 
• A tax-accounting worry-free: Once the accurately reconciled accounts are produced by the bot it allows the tax department to handle the tax payments with ease. Since the bot prepares accurate statements, the upcoming tax payments are also found to be accurate. The reports generated by the bots are accurately analyzed, error-free and intact with well-organized data, hence becoming compliant with the government’s tax rules and regulations. 

 Real-Time Usage of Bank Reconciliation Automation using RPA 

Consider a company XYZ, which performs reconciliation on daily basis at 4:00 PM IST. It usually performs reconciliation in the following manner. 

On average it took 200 hours per month for processing each supplier’s details. And this average got doubled for other larger suppliers, hence the entire process becoming a tedious and time-consuming procedure. 

To overcome the inefficiencies, the company implemented an RPA solution that could mimic the tasks in the reconciliation process quicker and more efficiently. The software robot could take care of each step in the process from logging into the email and retrieving data to logging into Oracle and categorization the invoices. The company saw a huge difference in the time taken by the software to perform these tasks. From 200 hours per month or 2400 hours per annum, the amount of time spent on reconciliation was cut down to 500 hours per annum. This helped the company save nearly £23,000. 

Using RPA tools in Reconciliation 

In RPA, reconciliation consists of some basic mandatory steps which can be considered the building blocks for the entire process. For instance, collecting the data for reconciliation, analyzing the data and deriving a generic format, and then performing the reconciliation on the derived generic input format and hence producing an easy-to-understand and efficient output report. This report may be considered the outcome of implementing RPA in reconciliation. To get this organized report, RPA uses numerous tools and activities among which a few basic tools have been listed below.  

A company may receive data for reconciliation in numerous ways from the clients, such as to get data from Emails, PDFs, from Excel Files or it can be provided as a simple text document. To perform reconciliation, RPA needs to get this data from the same source as the clients and save it in a particular folder. 

•  Uipath can accommodate various Mail servers among which a few are listed below to extract data from Emails by using the following activities:
  1. Get Outlook Mail Messages: Retrieves an email message from Outlook. 
  2. Get Exchange Mail Messages: Retrieves an email message from Exchange Mail Server. 
  Once we get all the mail messages, we can segregate emails based on the body of the mail and extract only the appropriate data required for reconciliation and store them in a common folder. 
• Uipath can extract data from PDFs by using the following activities: 
  1. Read PDF Text: Reads all characters from a specified PDF file and stores it in a string variable. This activity is useful to extract data from a PDF that contains text and not images. 
  2. Read PDF with OCR activities: The Read PDF with OCR Activity is used to extract data from the PDF documents which have both Text and Images.
  We can either extract the entire text from the PDF or we can also extract only required data from the PDF by finding it using a specific keyword and then extracting it. 
• Uipath can extract tabulated data stored in Excel sheets as well by using the following activities: 
  1. Read Range: Reads the data from an excel file with extensions .xls or .xlsx for a given range. If the range is not specified then this activity reads the entire spreadsheet and stores the data in a data table (a data type similar to tables in Uipath). 
  2. Read CSV: This activity extracts data from a CSV file and stores data in a data table just like the Read Range activity. 
• Uipath can also extract data from a simple text file by using the following activity: 
  1. Read Text File: This activity copies all the characters from a specified text file. 

So, these are some basic activities that can extract data from various types of files. Now that we have the data ready for processing, Uipath has various programming activities that can be used the perform reconciliation. Using the activities for efficient output generation depends on the developer’s skill-set in how he/she uses these activities and completes the reconciliation process.

When we talk about programming activities it includes the following activities: 

• IF
• Else IF 
• For Each 
• While 
• Do While 
• Switch  

Using these activities, we can match the given conditions for reconciliation and achieve our goal. Some activities can find the desired text or match it with the expected outcome and enhance the reconciliation process. 

1. Is Match: Indicated whether the specified regular expression finds a match in the specified input string, using the given matching criteria. 
2. Modify Text: Updates a text value using modifications including finding and replacing, trimming, and combining(concatenating) with another text value.  

Now once the desired result is achieved we can output this data into various files that may be given particularly given by the client or designed by the developer. We can output this reconciled data into an excel file, CSV file, or directly into a particular website given by the clients to enter the reconciled data. Basic UI activities used for controlling the websites are as follows: 

1. Click Clicks on options selected by the developer. 
2. Type Into Types into input fields such as username or login Id etc. 
3. Hover: Hovers over options or dropdowns available on websites.  

Uipath also allows us to manipulate a file and then store the file in a shared folder provided by the client. The following activities can be used: 

1. Create File: Creates a file in a specified location. 
2. Copy File: Copies a specified file to another location. 
3. Delete File: Deletes a specified file. 
4. Rename File: Renames the selected file 
5.  Write Text File: Copies a text and pastes it into a text file replacing any existing data in the file. 
6. Get File Info: Retrieves the properties of a specified file and saves the information for later use. 
7. File exists Checks if the file exists in the specified location. Returns true if the file exists and returns false if it does not exist. 

Conclusion 

RPA Solutions for Banking ensures that rather than spending hours every week balancing and checking the business checkbook, you can use the time, capital, and energy in bringing more business to your company. Let the bots do time-consuming and tedious work of bank statement reconciliations and get you the reports for the same. The bot will notify the right workforce if it finds any misdeeds in the accounts. The bot will also consign notices for amendment of the same errors. As the bot work on predefined programs, the chance of the bot making a mistake is next to zero. And hence, the designated staff will have countable problems to resolve, allowing them to direct their focus on fresh high-end, and creative work. Automating your statement conciliation process can help you concentrate on the results rather than the factual process. Human resources will only have to deal with the exceptions that have been associated with the system, which cuts down on time and costs exponentially. The adaptability of RPA results and the arrival of Artificial Intelligence approaches have created a new era of opening for banking and finance diligence.