Improving cash visibility with bank statement reporting

What is bank statement reporting?

Bank statement reporting is the process of generating and analyzing reports based on the information contained in bank statements. Bank statements are documents provided by financial institutions that summarize the chronological transactions and balances of a bank account over a specific period. They also contain bank account information, such as account numbers and a detailed list of deposits and withdrawals.

Bank statement reporting typically involves extracting data from bank statements and organizing it into meaningful reports for various purposes. These reports provide valuable insights into an individual’s or a business’s financial activities, helping them to track their incomes and expenses and provide an overview of their financial health.

Bank statement reporting applies to individuals and business units. In general, there are several challenges in extracting transaction details and account balances from statement files received from financial institutions, as there is no globally valid standardized message format for processing and reconciliation. Reconciliation within any treasury management system (TMS) of transaction details allows TMS users to configure their system, define format specific rules and automatically import account data into the treasury system to create individual business reports.

Overall, automated bank statement reporting plays a fundamental role in financial management by providing individuals and businesses with accurate, real-time and organized information about their bank account activities. This enables them to monitor and visualize their financial status and health at any time and make informed decisions.

How to achieve automated bank statement reporting

Bank statement reporting is still achieved manually using spreadsheets and similar tools and systems. This, of course, depends on the number of bank accounts and transactional volume overall. From a certain size, an automated machine-based process is advisable to avoid human errors and reduce human efforts. Setting up an automated process for bank statement reporting can be challenging in terms of “Data Accuracy”, “Data Integration” and “Categorization & Classification”. These aspects vary depending on the complexity of the financial activities and the tools or systems used for reporting.

Overcoming these challenges requires implementing robust data-management practices, leveraging automation and software solutions where applicable, and conducting regular audits and validations to ensure accuracy. Additionally, staying informed about industry best practices, regulations, and technological advancements can help address the challenges associated with bank statement reporting.

How automated bank statement reporting improves overall cash visibility

Cash visibility refers to the ability to clearly and comprehensively understand an organization’s cash position in (near) real time. It involves having up-to-date and accurate information about cash inflows and outflows, cash balances, and holistic liquidity status of a company’s financial accounts.

Overall cash visibility sources:

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Cash visibility provides crucial insights into an organization’s financial status and health. Cash balances from statement reporting play an essential role for cash visibility. Overall cash visibility, including cash balances across different accounts and cash management systems, provides you with the option to:

1. Perform cash forecasting to project future cash flows based on real historical data coming from bank statement reporting.
2. Perform cash position analysis based on cash position for a holistic liquidity status.
3. Create reports to provide insights into cash flow patterns, trends over time and key performance indicators (KPIs).
4. Facilitate the integration and consolidation of various financial systems, including accounting software, banking platforms, payment processors, and treasury management systems.

Having cash visibility based on bank statement reporting, and the integration with different financial systems, enables a unified view of cash positions across all the organizations (cross-holdings and subsidiaries), providing the basis for real-time financial transparency across different systems for effective cash management, risk mitigation, and strategic financial planning. For sure, there are challenges in terms of data integration, data accuracy and timeliness to achieve holistic real-time cash visibility. To overcome these, a combination of technology, process definition and improvement, data management, and collaboration among different teams and stakeholders must be worked out and integrated while complying with internal and external security policies.