Transaction Matching module of ARCS: How and When can it help?

Problem Statement

What is Transaction matching, why is it required and How ARCS can help?

ARCS Functionality

Oracle ARCS is a robust and secure solution for managing and automating account reconciliation period end processes and performing large scale transaction matching; improving efficiency and accuracy of financial processes and statements. With ARCS key capabilities, you can perform tasks such as automate high volume transaction matching and directly integrate with period end reconciliations.

It is a purpose-built solution on the cloud for managing the global reconciliation process.

ARCS offers two modules- 

What is Transaction Matching

In layman terms Transaction Matching itself indicates matching of transactions between different systems.

It allows organizations to automate the preparation of high volume, labor- intensive and complex reconciliations. These reconciliations can then be integrated with the tracking features within Reconciliation Compliance.

The goal of Transaction Matching is to load transactions from one or more data sources, match the transactions using predefined rules in ARCS, identify exceptions and explain the exceptions. Typically, the frequency of preparing reconciliations in Reconciliation Compliance is lesser than or equal to the frequency at which transactions are loaded.

For example, if balances are compared and reconciliations prepared every month, then transactions can be loaded daily, weekly, or monthly.

You can also use Transaction Matching for non-balance sheet reconciliations across disparate sources, also referred to as operational reconciliations.

Examples include system to system reconciliations, inventory/stock or share settlements, expense reimbursements and so on.

Note

Transaction Matching functionality is provided with Oracle Enterprise Performance Management Enterprise Cloud Service (EPM Enterprise Cloud Service) only.

Why you need Transaction Matching in day-to-day business

When you study your total number of reconciliations, you will find that a small number of reconciliations are the reason for most of the reconciliation work in your organization. This is why Transaction Matching functionality of ARCS is a perfect complement to Reconciliation Compliance.

ARCS has the tools to make those complex reconciliations simpler and then integrate the period-end results into the Reconciliation Compliance period-end process.

Benefits of Transaction Matching

The benefits of using Transaction Matching include the following:

• Saves the additional time and labor spent on manual preparation of complex reconciliations
• Reduces risks and improves the quality of the reconciliation process
• Removes inefficiencies in the process of preparing reconciliations
• Reduces human errors and speeds up the reconciliation process
• Reduces time taken for financial close
• Improves trust and reliability while providing accurate numbers
• There is no need to make any changes in ERP system for source data extraction as it adapts existing environments
• Millions of transactions can be matched in minutes
• It offers competitive advantage as organizations can deploy resources to high value activities such as analytics

Scenarios for Which Transaction Matching is Beneficial

• Balance sheet-related reconciliations
• Suspense and Clearing Accounts
• Intercompany
• Cash
• Credit card receivables
• Detailed Subledger reconciliation
• Operational, off-balance sheet, reconciliations
• System to System reconciliations (which typically involve two third-parties whose accounts must be in sync with each other)
• Stock or share settlements
• Expense reimbursements

Transaction Matching Workflow

The workflow for using Transaction Matching includes multiple steps that must be performed for each account reconciled. The steps must be repeated each time new data becomes available.

Transactions can be imported from any source. The import process can be run on demand or scheduled to run automatically.

The Auto Match process matches transactions according to predefined rules and users need to focus only on the exceptions. Auto Match creates:

•      Confirmed Matches, where no further action is required
•      Suggested Matches, where the user can either confirm or discard the match.

Period-end reconciliation is performed at a frequency that depends on your business requirement.

Reconciliation Methods for Transaction Matching

Transaction Matching formats are based on one of the following reconciliation methods:

 Balance comparison with Transaction Matching

 This method is used to compare balances and match transactions between two distinct sources, such as source systems and subsystems.

        For example-

• Match point of sale system vs a merchant transaction system, or
• Match the transactions between accounts payable and journal entries within the general ledger.

 Account analysis with Transaction Matching

This method is used to match transactions within a single data source.

For example-

Debit and credit matching. The most common use case is if you are netting off transactions within a single data source to determine the net balance for an account, such as a clearing account.

Transaction matching only

This method is used primarily to match transactions between two systems, without a period-end reconciliation.

Thank you!