Automating bank reconciliation means having a system read each transaction on the bank statement, find the invoice it corresponds to and propose the match, with the reasoning behind each proposal. The team stops checking the statement line by line and only looks at the transactions where the match is not clear.
In most SMEs, reconciliation happens at month end, with the statement open on one screen and the ERP on another. It is work that demands attention rather than judgement. Most transactions have an obvious invoice, and the time goes on confirming the obvious. As volume grows, the close slips, and the few transactions that deserved analysis get lost among hundreds that did not.
What is bank reconciliation and why is it still done by hand?
Bank reconciliation is the comparison of the transactions on the bank statement with the organisation's own records. Every receipt must match a customer invoice, every payment a supplier invoice, and every fee or interest charge must be posted. At the end, the bank balance and the accounting balance must explain each other.
Many ERPs already suggest matches when the amount and the reference agree. What is left for people are the remaining cases, and those are the ones that take the time.
- Transfers with no reference, or with the customer's name written differently.
- A single payment that settles several invoices at once.
- Partial payments, advances and rounding differences of a few cents.
- Fees, taxes and interest that the bank deducts without a document.
- Statements from several banks, each with its own format and its own portal.
How does automated bank reconciliation work, step by step?
A well designed process always follows the same sequence, with people involved only where they are needed.
- The statement arrives. The process can start at a scheduled time every day, and an intelligent RPA can fetch the statement from the bank portal when no integration is available.
- Each transaction is read. The amount, date, description and counterparty are identified, together with where each piece of data was read.
- The invoice is found. The platform cross-checks the transaction against the open invoices in the ERP, following the rules set by the organisation.
- A match is proposed. Each proposal comes with its reasoning, showing what was confirmed and what remains to be confirmed.
- The team decides what is unclear. Transactions with no obvious match reach a person already prepared, with the candidate invoices that were found.
- Every correction teaches. The team's corrections guide the cases that follow.
What criteria are used to match transactions and invoices?
Matching should not rely on intuition. It should follow written criteria that the team knows and can adjust.
| Criterion | What is compared | When it is not enough |
|---|---|---|
| Amount | The transaction amount against the invoice total | Partial or grouped payments |
| Reference | The invoice number in the transfer description | Transfers with no reference |
| Counterparty | The name of whoever paid or received | Abbreviated names or payments made by third parties |
| Date | The transaction date against the invoice due date | Early or very late payments |
When two or more criteria agree, the proposal is strong. When only one agrees, or when there is more than one candidate invoice, the transaction should go to a person. The rules belong to the organisation, and they should be kept with versions, so that it is always clear which rule was applied to each case.
What should be left to AI and what to rules?
Artificial intelligence is useful for reading. A description such as “TRF FT 145” or an abbreviated name is read better with AI than with a fixed rule. But the decision to reconcile should not be left to a model that can be wrong with complete confidence.
In EngiAIFlow, this separation is built into the platform. AI proposes, and the platform decides what is executed.
- Bank reconciliation and calculations are done by the platform, without AI.
- Every value AI extracts from a document comes with the sentence it was read from. Without that sentence, the value goes to a person.
- Limits such as “above this amount, ask for approval” suspend the case before the step, until a person approves.
- A write to the ERP is never repeated automatically. If the process is interrupted, a person decides whether the write has already been made.
- Credentials for the portals are encrypted and are not sent to the model.
For the finance team, this means every reconciliation can be explained. The history of each case records what was done at each step and every human decision, with the change and the reason.
What does it look like in practice? An example
Imagine an industrial company with three bank accounts and around 800 transactions a month. Today, someone in accounts downloads the statements from each portal, opens the ERP and reconciles transaction by transaction, over several days at the start of each month.
With the automated process, the statements are collected every day, and most transactions arrive the following morning with the corresponding invoice already proposed and justified. The person opens the list of those needing attention, which is where the transfers without a reference, the grouped payments and the fees sit, and decides those. The close no longer starts from scratch, because the month has been reconciled along the way.
Where should you start?
Reconciliation is a good first process to automate, because the rules already exist in the heads of the people who do it and the result is easy to check. Before choosing a tool, it is worth answering four questions.
- How many transactions a month, across how many banks, and how does each statement arrive today?
- What share of transactions has a reference or amount that identifies the invoice beyond doubt?
- Which cases take the most time today, and who decides each one?
- Does the solution work on top of the current ERP, or does it require a change of system?
EngiAIFlow connects to the ERP, email and other tools without replacing systems, and treats bank reconciliation as one of its processes, alongside supplier invoice matching. The processes and the governance are described on the EngiAIFlow page.
Frequently asked questions
What is bank reconciliation?
It is the comparison of the transactions on the bank statement with the organisation's records, so that every receipt and payment matches an invoice and the bank balance is explained by the accounting balance.
Does artificial intelligence decide which invoice matches each transaction?
In EngiAIFlow, no. Reconciliation is done by the platform, without AI, following the organisation's rules. Transactions where the match is not clear go to a person.
How does the statement reach the system?
The process can start at a scheduled time, and when no integration is available an intelligent RPA fetches the statement from the bank portal. Credentials are encrypted and are not sent to the model.
What happens to a payment that settles several invoices?
If the rules cannot resolve it safely, the transaction reaches the team with the candidate invoices already found, and a person decides.
Do we need to change ERP?
No. EngiAIFlow connects to the ERP the organisation already uses, without replacing systems, and proposes the match against the invoices held there.