Maximizing the reconciliation process

Monday, February 5, 2018 | By NIck Nolan

Maximizing the reconciliation process

Reconciliation is very much a unified effort between technology, data and people. All three need to work in harmony for the process to maximize efficiency.

Our earlier blog focused on two key, interconnected, concepts within reconciliation that our customers typically face: data and technology. Without good counterparty data management you can have the best reconciliation tool in the world and it won’t matter since you will be spending all your time working through data issues. The same can be said about the reverse – bad data and a good reconciliation tool.

Taking this to the next logical step, the data and technology aspect of reconciliation also heavily relies on the people. Customers will need to employ reconciliation experts who can work through breaks and issues while efficiently tracking and managing the whole reconciliation process.  As businesses grow and expand into different asset classes, with more custodians and counterparties, it can become difficult to keep reconciliation entirely in house.  One solution firms consider is outsourcing certain aspects related to reconciliation.

This growing trend can be broken down in two main buckets:

  1. In the first bucket, customers outsource the “first pass” of reconciliation to third  parties to review all breaks, provide annotations and propose resolution. The line stops at actually fixing things or reaching out to custodians or counterparties.
  2.  In the second bucket, customers look for third parties to take it one step further. Third parties will review, annotate, and propose resolution. A firm would then approve those resolutions and the third party would make corrections by either adding or updating transactions to the internal accounting system or reach out to a custodian or counterparty for additional details on the break.

We have seen two main ways that firms benefits from outsourcing reconciliation.  The first is that customers can have more data reconciled besides the usual daily positions, transactions and cash.  These additional data elements include: trial balance, reconciliation to street and fund administrator (3 way), and price reconciliation - to name a few.  The other is that firms can choose which tasks to outsource and how long they want to outsource these functions.

For more information on reconciliation with Advent Outsourcing Services contact Nick Nolan or one of our representatives at SS&C Advent.

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