What next after matching?
To be frank, the important stuff. The reason to match is to find exceptions, or breaks as they are called in some industries, even though we hope to see none. The best result is a blank exceptions listing. However, this scenario frequently evades us, often as a consequence of situations outside of our control (such as third parties). Exceptions are what cause risk to the business: financial risk, reputational risk, the risk of losing clients, or of failing an audit, or of falling foul of compliance-related regulations and legislation. If, therefore, we accept that exceptions happen, how best can we deal with them?
Degrees of exception resolution
The answer is quickly and efficiently, commensurate with the level of risk they pose, and in a way that clearly demonstrates this. In this article we define two degrees of exception resolution: exception management and case management. The latter builds upon the former and may - or may not - have validity in various situations. Consider two scenarios:
The first is a traditional bank (check) reconciliation: matching checks issued to those cleared by the bank. The match rate is high - over 99% - and the transaction values low. The transactions should match one-to-one. Where there is a discrepancy it is likely sufficient and appropriate for a user to review these on screen, work through them, annotate notes and comments, and get them resolved. The above represents base exception management.
Now envision the matching of trading activity at an investment manager. Very high transaction values, many-to-one or many-to-many matching, high risk associated with clients' monies. A million dollar break requires immediate attention. Here multiple transactions may need to be grouped together, and defined resolution workflows, likely with multiple resolution paths, applied. Initial and ongoing alerts, reminders, and escalation triggers for delays need to be automatically generated. Here we are talking about case management.
How increased automation can help boost compliance
If good financial governance dictates that the timely reconciliation of accounts is in order and the resolution of exceptions a necessary step in this process, then legislation and other regulatory requirements across most geographies and industries require it to varying degrees. It is insufficient merely to undertake exception resolution; one also needs to prove it. An enterprise reconciliation solution allows all these activities to be recorded within a single, easily accessible database. This not only reduces day-to-day operational costs, but also renders audit activities, internal and external, much more efficient.
To be frank, the important stuff. The reason to match is to find exceptions, or breaks as they are called in some industries, even though we hope to see none. The best result is a blank exceptions listing. However, this scenario frequently evades us, often as a consequence of situations outside of our control (such as third parties). Exceptions are what cause risk to the business: financial risk, reputational risk, the risk of losing clients, or of failing an audit, or of falling foul of compliance-related regulations and legislation. If, therefore, we accept that exceptions happen, how best can we deal with them?
Degrees of exception resolution
The answer is quickly and efficiently, commensurate with the level of risk they pose, and in a way that clearly demonstrates this. In this article we define two degrees of exception resolution: exception management and case management. The latter builds upon the former and may - or may not - have validity in various situations. Consider two scenarios:
The first is a traditional bank (check) reconciliation: matching checks issued to those cleared by the bank. The match rate is high - over 99% - and the transaction values low. The transactions should match one-to-one. Where there is a discrepancy it is likely sufficient and appropriate for a user to review these on screen, work through them, annotate notes and comments, and get them resolved. The above represents base exception management.
Now envision the matching of trading activity at an investment manager. Very high transaction values, many-to-one or many-to-many matching, high risk associated with clients' monies. A million dollar break requires immediate attention. Here multiple transactions may need to be grouped together, and defined resolution workflows, likely with multiple resolution paths, applied. Initial and ongoing alerts, reminders, and escalation triggers for delays need to be automatically generated. Here we are talking about case management.
How increased automation can help boost compliance
If good financial governance dictates that the timely reconciliation of accounts is in order and the resolution of exceptions a necessary step in this process, then legislation and other regulatory requirements across most geographies and industries require it to varying degrees. It is insufficient merely to undertake exception resolution; one also needs to prove it. An enterprise reconciliation solution allows all these activities to be recorded within a single, easily accessible database. This not only reduces day-to-day operational costs, but also renders audit activities, internal and external, much more efficient.
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