Update October 23, 2020 – Kars Stal, Marc Atos, and Chandan Malhotra
World class companies leverage purpose built tools to streamline the account
reconciliation process. These tools provide automation, workflow capabilities, and increase overall compliance within the account reconciliation process. The reconciliation process, when manual, is extremely time-consuming and can be a major bottleneck in the overall close process. In addition, manual processes introduce ‘risk’ within the process through human error.
Though many of the account reconciliation tools on the market today provide similar capabilities, there are key differences, which may make one a better fit for any organization than others. Choosing which tool best fits your organization can be a challenging decision, with factors such as functionality, user experience, and total cost to take into consideration.
This article will compare the industry leaders of account reconciliation tools including:
- Oracle Account Reconciliation Cloud (ARC)
- BlackLine Account Reconciliation
- Trintech Cadency
This article is written by experienced Oracle implementers with deep expertise in account reconciliations. New functionality is released on a monthly basis for all products compared. For a detailed comparison of the products, it is recommended to engage with the respective software providers for demonstrations based on your specific reconciliation and matching requirements.
Oracle ARC stands out among its competitors, amongst others due to lower total cost of ownership over 3 – 5 years, ability to fully cover the financial close process across multiple integrated products, and set-up and reporting flexibility to address company specific needs.
In this article, we will discuss functionality that was assessed and reasoning for the overall rating.
Integrated Data Loads
The integration and flexibility with BlackLine and Trintech require a specific data set format and file-based data loads. On the other hand, Oracle ARC allows for direct integration, flexible file-based data loads and account grouping (beyond functionality available in BlackLine and Trintech) to reduce per month reconciliations. Direct integration and automated file-based data loads are enabled through a combination of Oracle Integration Agent, EPM Automate, and Data Management, which is the data integration toolset for ARC. This toolset is very powerful and has the ability to transform and map data into the required target format from a wide variety of source flat files. In addition, Oracle EPM Integration Agent is a fully unified solution for extracting and transforming data and metadata from on-premises or any system such as a third-party cloud and delivering it to the Oracle ARC.
There are four major account grouping functionalities that should be considered.
- Summary Reconciliations – One reconciliation that summarizes multiple reconciliations with corresponding general ledger balances and its own workflow
- Grouped Reconciliations – One reconciliation with designated workflow that presents multiple balances for explanation and adjustment, but the overall reconciliation is grouped into a single grouped balance for sign-off
- Individual Reconciliation – One reconciliation with designated workflow that presents a single balance for explanation and adjustment, even though drill-through level may have multiple balances that make up that single balances
- Drill Through – Ability to view complete makeup of reconciliation balances at subdimension levels with accessibility back to the source ERP system.
BlackLine and Trintech offer two levels of account grouping: indivdual and grouped reconciliations. Oracle is the only vendor that provides all four grouping options including Drill Through. The Drill Through functionality provides access to source ERP account inquiry and analysis page directly from the account reconciliation page. This allows reconcilers to investigate general ledger data sources from journal entries and subledgers to resolve potential issues. Oracle supports drill through to numerous ERP systems including SAP, JD Edwards, Peoplesoft, E-Business, and many more. BlackLine and Trintech do not offer comparable drill through functionality.
Out of the box automation for administration is an important feature when analyzing Account Reconciliation solutions, due to the minimized configuration and ongoing maintenance required and ability to guarantee data is not influenced during the reconciliation process. BlackLine and Trintech do not provide out of the box automation tools for application administration, while Oracle ARC provides EPM automate. EPM automate enables significant automation for mass administration updates and integrated data loads with basic skills required to configure the utility.
Application Utility and Workflow
The number of templates and ability to configure templates provide companies more flexibility in their solution. BlackLine and Trintech provide 8 templates with minor distinguishable differences, while Oracle ARC provides more than 20 best practice enabled templates with the ability to configure to fit business process. Template configuration ability needs to be reviewed against client requirements. Most clients fit into a basic structure of template usage and all software vendors cover this requirement. For detailed procedural requirements, Oracle ARC is the best fit as it allows for configuration of workflow rules and attributes to enforce compliance.
Account reconciliation tools must also provide workflow functionality to track and manage the account reconciliation process. All software vendors provide standard workflow with multiple levels of review. Oracle ARC provides functional rules to enforce actionable workflow items that support accounting policies and procedures. In addition, business rules can prevent a preparer from submitting a reconciliation if an identified adjustment or reconciling item exists without an action plan. ARC also allows for configurable auto reconciliation rules based on user role (preparer & reviewer). For example, preparer manually submits reconciliation and analysis for approval. Workflow rule initiates auto-review of the reconciliation and marks as ‘Closed’ due to off quarter submission and no journal entries required.
Dynamic Risk Rating
General ledger accounts are associated to a risk rating based on identified criteria. Risk ratings provide the basis for determining reconciliation frequency for a general ledger account. Account reconciliation vendors provide the basis for supporting the classification of balance sheet reconciliations by risk. Additional monitoring capabilities should be considered to enable dynamic risk rating to automatically assigns risk levels to each account based on quantitative factors including materiality and volatility.
All software vendors provide risk rating categorization for account reconciliations:
- Oracle ARC provides functional rules that assign a dynamic risk rating to reconciliations based on attributes defined by accounting policies and procedures
- Trintech Cadency provides dynamic account maintenance to update account reconciliation properties. Requires technical administrators to maintain and update criteria.
- BlackLine and Trintech allow setting risk rating once a month and manual process to update reconciliations
- BlackLine does not provide notification for reconciliation that require a risk rating change
Transaction Matching and Variance Analysis
All software vendors provide Transaction Matching solutions. The main difference between the vendors is accessibility through a unified platform and the degree by which period end certification and the matching workflow are integrated.
Trintech Account Reconciliation and Transaction Matching is housed in separate modules, whereas BlackLine and Oracle provide access to both modules within the same platform. Oracle integrates the Account Reconciliation and Matching workflow with dedicated reconciliation methods: Account Analysis with Matching and Balance Comparison with Matching. The integrated workflow provides clients with the ability to link unmatched transactions as reconciling items for period end reconciliations.
Clients should also discuss pricing options with the respective vendors. Both BlackLine and Trintech incorporate a pricing model based on number of transactions. Oracle products are licensed based on an Enterprise model which includes Transaction Matching plus additional EPM solutions that resolve many other Financial Close and Planning business processes like Consolidations, Tax reporting, Profitability and Cost Management, Narrative Reporting, etc. The Enterprise license is assigned per user with no set maximum limit or additional cost for loaded transactions.
Similar to Transaction Matching, the main difference with variance analysis, is based on the
module integration and licensing. BlackLine Variance Analysis is housed in a separate module and charges a separate license fee for Variance Analysis module. Trintech’s Variance Analysis is integrated within the Reconciliation module but is limited to the reconciliation template workflow with limited options for amount or % variance. Oracle ARC provides additional value from account reconciliation to variance analysis within the same platform without incurring any additional license fee. Dedicated Variance Analysis formats and robust data integration qualify period over period, quarter over quarter workflow. Additional attributes are provided to support Consolidation Flux reports with commentary.
When choosing an account reconciliation tool, companies must consider functionality, performance, client satisfaction, and overall cost of ownership. Additional consideration should be given towards vendors that qualify finance and accounting processes beyond close management. Oracle EPM cloud includes account reconciliation, transaction matching, and extends through the entire Record to Report process: planning, budgeting, forecasting, consolidation, and reporting.
We recommend that clients prepare a full list of requirements related to the account reconciliation solution and include broader close and consolidation toolsets and capabilities. Dependent on these requirements and your overall platform strategy Oracle EPM Cloud and Account Reconciliation is a tool to be considered.