PricingSupportSign InTry Neat FREE

Transaction Reconciliation Sucks. Now, You Can Automate it Instead.

September 29th, 2020Accounting & Bookkeeping

Transaction Reconciliation for Small Business

There’s a difference between what you know about your business’s finances and what your bank knows.

Balancing out the difference is a process called “transaction reconciliation.” Doing it manually sucks time, energy, and momentum out of your day-to-day.

But with Neat, you can reclaim that precious time and energy by automating the task.

The many problems with manual transaction reconciliation

In theory, matching bank records with an internal ledger should be straightforward. In real life, though, this task is a struggle for multiple reasons.


According to a survey conducted by the Association of Accountants and Financial Professionals in Business (IMA), the top three time- and energy-sucking bookkeeping tasks are jobs that can (and should) be automated.

Processes Requiring the Most Time and Effort - transaction reconciliation - The Neat Company Small Business Blog

One of the reasons transaction reconciliation takes so much time is because traditionally, bookkeepers had to wait until the end of the month to begin the task. Not only does this kind of waiting around waste time, but it also means the transactions aren’t fresh in the business owner’s memory. At that point, they must piece together what they remember of the expense or payment, sometimes looping in other involved parties. The lapse also means teams must make more adjustment entries than if the work is done in real time.

Despite this time suck, the same IMA survey revealed that two-thirds of businesses (and their finance teams) still admit to reconciling transactions and accounts manually.


Gartner analysts call reconciliation management the “last mile of finance” because the task is known as the hairiest, most resource-intensive part of keeping business books neat.

What makes it so frustrating? It’s a process fraught with technical bottlenecks you may know well:

  • Ending balances rarely match upon the first comparison.
  • Valuable hours are then spent searching for causal transactions.
  • It’s impossible to tell if a mismatched, missing, or duplicate item is someone’s error or their deliberate injection of real-life nuance.
  • Typical apps and programs don’t allow for multifaceted, complex real-life scenarios, forcing practitioners to rely on “making notes” or modify usage of tools.
  • Software can also frustrate the process, especially when they incorporate new or unnecessary features that complicate routine tasks—tasks that should be simple.

If the technical hurdles weren’t enough, manual transaction reconciliation also erodes morale. Often, multiple people administer the books. Experts at Accounting Today report that only 33% of small business owners employ bookkeepers or accountants, indicating the majority of companies’ owners and office assistants do the work themselves.

That means team members often ask one another questions no one in the business is qualified to answer. One effect of this confusion is accountability imbalance, a condition that weakens the group’s morale. For example, if the books are set up incorrectly, one team member will use that as an excuse to dodge responsibility while another tries to compensate by spending more time figuring it out.

You’ve heard of decision fatigue for individuals. Apply the same principle to your team: A healthy group can resolve a finite number of friction points per day before collaboration suffers and relationships deteriorate.

“When I was doing bank recs, it was two hours doing the actual reconciliations,” writes one bookkeeping practitioner on Reddit, “and 10 hours following up to get other people to fix the transactions that were wrong.”


The only thing more discouraging than doing a job that could be automated is discovering you made a mistake. Manual reconciling work feels especially futile when it produces an unreliable bottom line because we’re . . . well, we’re humans.

And when you’re busy, knowing you’re likely to fumble a keystroke or two adds a new level of ugliness to the task.

Bloomberg Industry Group (research analysts formerly known as Bloomberg’s Bureau of National Affairs) surveyed 200 U.S.-based businesses and found that over 27% said incorrect data—manually entered—caused most of their accounting discrepancies.

That reality makes transaction reconciliation one task most urgently in need of automation. A new study from Ernst & Young confirmed that conclusion by showing that the finance function doesn’t just need computerization, it’s also the most primed and ready to benefit from automation.

This means business owners and bookkeepers know their work is flaw-riddled and can deduce there’s likely a tool “out there” that can automate this work, but they’re not aware of (let alone wielding) it just yet.

The solution: An automation tool that solves these reconciliation problems

With the wrong tools, transaction reconciliation will always be time-consuming, frustrating, and soul-crushing. Excel alone is impractical, still allowing one vendor to be spelled six ways, for example. And on the other end of the spectrum, tools like QuickBooks are excessively “robust,” charging you for bells and whistles meant for certified accountants.

But with a tool like Neat, matching and clearing transactions is the opposite:


Connecting your financial institution (and its multiple accounts) takes less than five minutes. Then:

  • When you make a purchase on-site, you can use the vendor’s point of sale system (like Square or ShopKeep) to email receipts to your unique NeatCloud email address. The option displays on most small business owners’ checkout screens.
  • Alternatively, you can scan it in with your mobile device’s camera.
  • The item processes within minutes (plus any time that your banking institution requires). Other “solutions” take 24 to 48 hours (on top of what your institution requires).
  • Neat automatically matches and reconciles the transaction with your financial institution.
  • Need to separate or combine items within the transaction you just made? Customize categories at the line-item level on the Neat mobile app now or later.

Reconcile Transactions Diagram - transaction reconciliation - The Neat Company Small Business Blog

Did you catch that? Your transaction reconciliation is done. You didn’t have to clear your calendar, prep your mind, collect your bank statements, grab a ruler, compare starting/ending balances, verify each event line-by-line, locate mismatches, rule out obvious causes, investigate unusual possibilities, ask team members to explain discrepancies, all while missing important customer phone calls or your kids’ sports events.

The IMA report cited above revealed that restored time is, by far, the number one benefit business owners say they’d gain from automating transaction reconciliation.

Most Cited Benefits of Spending Less Time on Closing Cycles - transaction reconciliation - The Neat Company Small Business Blog

And now you can see why.


Neat provides relief from the obstructions of transaction reconciliation, but it also delivers a shot of fuel:

  • It allows business owners to reconcile in real time instead of once a month, preventing a backlog that weighs on business owners mentally.
  • Removing this mental load liberates business owners to focus on tasks that matter more for the company. That mindshare can be devoted to big-picture strategy, growth activities, vision casting, and developing talent.
  • Psychologist Beata Souders, MSPP, ACC, says that smaller challenges like this (the necessary ones you can’t eliminate but can streamline) rewire the brain to make the task easier. In fact, the more you tackle a small challenge with a powerful tool, the more enjoyable it becomes.


Human data entry typically produces errors at a rate of .55% to 26.9%. The problem with finance is that one figure will throw off the others, creating a snowball of inaccuracies that are hard to trace back to the source(s). This is never more true than when it comes time to reconcile transactions.

Thankfully, Neat extracts data with 99.9% accuracy, eliminating much of the mistrust leaders have when they approach their accounts. Imagine opening up your dashboard and knowing that the snapshot you see there is a reliable picture of your current situation.


Automating financial administrative tasks is a competitive advantage today. Tomorrow, it’ll be table stakes.

How do we know? Because organizations that spend less time gathering and more time analyzing financial data consistently outperform their counterparts, as reported by PwC.

Rebecca Wettemann, vice president of Nucleus Research, has said that “the ability to close the books close to every day allows you to make course corrections more quickly, and identify areas that are problematic before they boil over into a crisis.”

And in any competitive market, the business that achieves this ability first will outpace those that don’t.

Transaction reconciliation doesn’t have to suck

You’ll always have to handle the matches and mismatches between your internal tools and your bank’s records. But doing so really shouldn’t suck your time, energy, or good spirits. Reclaim all those resources and re-route them to more worthy aspects of your business. Start a free trial of Neat today to experience a better way of keeping your business books nice and neat.

Share This Article


This website uses cookies to improve your experience. By continuing to browse the site, you are agreeing to our use of cookies. Review our Privacy Policy for more details.