DATA STORIES | FINANCIAL ANALYTICS | KNIME ANALYTICS PLATFORM
Bank Reconciliation Automation
A no-code implementation using KNIME Analytics Platform
Bank reconciliation is a crucial process in the financial management of any company. This procedure involves the comparison and adjustment of internal accounting records with bank movements. It is essential to maintain the integrity and accuracy of accounting, but it is often a tedious process and prone to human error.
The manual bank reconciliation procedure can result in a significant challenge for financial teams, as it involves the thorough review of transactions, dates and balances of suppliers, creditors, customers and other business partners, with all parties being critical. In addition to being time-consuming, this manual process increases the risk of errors and omissions, which could affect the entire company.
This is where the company and the financial management must consider the automation of this task. Today, I want to show you how I have done it in my company with KNIME. This is not a use case but a 100% real implementation using data from a medium-sized Spanish company. Because of that, I won’t be able to describe my work with the usual wealth of details, nor will I share my workflow.
The tool: KNIME
KNIME stands out as a powerful yet user-friendly analytical tool that can serve very well the purpose of simplifying and streamlining the bank reconciliation process. The best thing about KNIME, apart from its incredible community, is that it is 100% free in its local version, and completely open-source.
The automation process
Automating bank reconciliation with KNIME offers several benefits. First, it dramatically reduces time spent on manual reconciliation, allowing finance teams to focus on more strategic tasks. Additionally, by minimizing human intervention, errors are reduced and the accuracy of financial reporting is improved.
KNIME’s extensive capabilities to access a broad range of files and formats allows to swiftly connect with databases, cloud services, banking and/or accounting systems, or import local files, facilitating the automatic extraction and comparison of data. In my automation implementation, I’ve imported two Excel files stored locally. A portion of my workflow is displayed below:
I will briefly summarize the entire process. Although it may seem long, it is quite simple, to the extent that I have only used basic KNIME nodes:
- We load the data in the standard format of both the bank and our accounting system with the Excel Reader nodes. If you use SAP, Navision or other systems, it is easy to directly connect KNIME to it and import data.
- We adapt and equalize the two tables, using various nodes such as the String Manipulation node to manage string columns, the String to Date&Time node to go from string to date, the Math Formula node to perform mathematical operations, the infallible GroupBy to group rows, and the all-powerful Joiner to join both tables.
- Next, once we have the two tables in the same format, we can compare them with the Column Comparator node. In this way, we can easily identify rows (days and money amounts) that do not match and correct the mistake. Additionally, with the use of flow variables, we can further refine and automate the reconciliation process to automatically spot the days and amounts that do not fit and correct them.
The KNIME team made a video and article about another bank conciliation use case, here is the link:
Conclusion
In conclusion, bank reconciliation is an essential but often tedious task in the financial management of a company. Automation with tools like KNIME not only simplifies this process, but also improves efficiency, reduces errors, and provides significant savings. By adopting modern technology solutions, companies can move towards smarter and more effective financial management.
If you think this or any other automation or analytics process would be necessary in your company, write to me!
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