Record to report / R2R – Reconciliations

Customer

We started with Customer accounts reconciliations in the previous FAO post.

http://faoblog.com/processes-record-report-r2r-reconciliations-customer/

I shared an example where you can add value through a simple process of customer account reconciliations.

When you really look at this process, the benefit to the client come in through the upstream and downstream processes associated with the process. Quite often, a client / principal will really push back to ensure that you as a back office or an outsourcer will do only what you are asked to. But the benefits of a back office will come only when you can consolidate and target stuff beyond the regular transaction or the job you are doing.

So, what would be the job for “customer account reconciliation”?

You pull out a statement from the general ledger or the customer receivables system, and compare this to that received from the customer himself.

Any differences need to be identified and corrected, either in the customer’s books or your clients books. Looks simple!!!

But then quite often the differences are due to a multiple set of reasons. This is what adds to the complexity and the challenges of this process.

So what would be some of the key things leading to these differences?

  • Difference in rates
  • Promotions not affected in billing
  • Debits on account of interest / penalties charged by your client, but not entered in the customer’s books.
  • Differences in transportation and freight
  • Disputes for different charges / credits
  • Returned material
  • Unaccepted / unapproved services
  • Billing errors

There are lots of reasons, and these lead to resolutions….. thought for the next post J

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Have you been following our accounting blog?

http://faoblog.com/category/accounting-core/

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