Beware the Backlog

How does your custodial reconciliation team handle the inevitable backlog? We often find that clients simply pay off unresolved items deemed too tangled to warrant research time, even after hiring a dedicated consulting team. And this process works—in the short term. But ignoring the backlog, and not determining the actual cause of outages, has multiple hidden costs.

• Unnecessary write-offs : Even if you’re reporting on time, writeoffs are still an expense. And throwing money at the backlog just addresses one symptom of an ineffective custodial reconciliation process, without eliminating the cause(s).
• Limited time for root-cause analysis: When analysts are constantly looking back at outages from previous periods, they have little time for digging into root causes. That means that the outage may keep recurring—and eventually keep requiring writeoffs.
• Audit findings: Spending a dollar to recover a penny may seem trivial. But over time, a high number of write-offs can accrue to the point that they become material items on your balance sheet. Such audit findings can result in lost revenue, damage reputation and put more strain on an already overworked department.

Get to the Root Cause of Your Backlog

Why is it so common to have an extensive backlog of outages to resolve? It is a sign of an unhealthy reconciliation process. Most companies manage their process using cumbersome Excel spreadsheets riddled with manual inputs, all highly susceptible to errors. According to our recent case study, one client’s analysts spent only 34% of their time researching and resolving outages. That means they used to spend 66% of their time on activities that don’t help prevent the backlog from happening in the first place. The right custodial reconciliation software can help you eliminate the cost and risk associated with a backlog. Look for a system with these attributes:

• Automated data gathering and import: Collecting and entering data from a wide variety of sources can require significant FTE hours. Automation frees up that time for other tasks like researching and resolving outages.
• Real-time tracking and ageing of outages: This feature can prevent outages from slipping through the cracks and ageing beyond their deadline.
• Built-in controls: A manually produced reconciliation package can be submitted with errors or with overlooked outages. Built-in controls eliminate these possibilities and ensure that root causes are consistently applied to outages.