Key takeaways
- Most payment firms start reconciling in spreadsheets, and for a small business that can work.
- The risks grow with volume, entities, currencies and sources: manual errors, key-person dependency, weak audit trails and late results.
- Clear signs of having outgrown spreadsheets include rolling breaks, late daily positions and figures that cannot be reproduced for a past date.
- Moving to a platform should run in parallel with the spreadsheet until results agree.
Why firms start with spreadsheets
Spreadsheets are flexible, familiar and free. A young payment firm with one bank, one processor and a few thousand transactions a day can reconcile in a well-built workbook, and many do. The spreadsheet is not the problem at that stage. The problem is that the business grows faster than the workbook can be adapted, and the risks build up quietly.
The point at which spreadsheets stop being safe is rarely a single event. It is the accumulation of small additions: a second bank, a new currency, a payout partner with an unusual file, a second licensed entity. Each one adds tabs, lookups and manual steps, until the workbook depends on a few people who understand it and a process that only works when nothing unusual happens.
The risks
The risks of spreadsheet reconciliation are well known to auditors.
| Risk | How it shows up |
|---|---|
| Manual data entry | Figures copied or typed from bank portals and reports, with errors and no trace to source |
| Formula errors | A broken lookup or range that silently drops rows |
| Key-person dependency | Only one person understands the workbook and its exceptions |
| Weak audit trail | No record of who changed what, when and why |
| Version control | Several copies of the same file with different figures |
| Late results | The daily position is finished after funding decisions are made |
| No reproducibility | The position for a past date cannot be shown exactly as it was |
The signs a firm has outgrown spreadsheets
The clearest sign is that breaks start rolling forward: differences found one day are still open days or weeks later because the team cannot keep up. Others include the daily customer-money position arriving later each week, new processors or currencies taking weeks to add, month-end returns that do not agree with daily records, and an auditor asking for the position on a past date that the team cannot rebuild with confidence.
Ask a simple test question: if the person who maintains the workbook were unavailable for two weeks, could someone else produce the daily position, explain every open break and answer an auditor's question about a past date? If the honest answer is no, the firm has outgrown the spreadsheet, whatever its volumes.
For regulated firms, these signs matter more than efficiency. Under the UK's CASS 15, reconciliation must be performed every reconciliation day and shortfalls corrected the same day. In the US, permissible investments must cover obligations at all times. A spreadsheet process that cannot keep pace is a compliance risk, not only an operational one.
Moving to a platform safely
Run the new platform alongside the spreadsheet for a defined period, ideally covering a month end. Compare results daily and investigate every difference: some will be errors in the platform's configuration, others will be errors the spreadsheet had been hiding. Retire the spreadsheet only when the results agree and the team trusts the platform's break handling. Keep the spreadsheet history archived for audit.
Plan the move around the firm's regulatory calendar. Avoid switching during an audit period close or immediately before a regulatory return, and agree with the auditor in advance how the parallel run will be evidenced. A well-documented migration is itself a sign of good control.
Safeheld loads data from source, applies consistent matching and regulatory rules, records every break with its owner and resolution, and can reproduce the position for any past date. See reconciliation break management, payment operations automation and best reconciliation software for payment companies.
Frequently asked questions
Is it acceptable to reconcile customer funds in spreadsheets?
It can work for small firms if data comes from source and records are controlled, but risks grow quickly with volume and complexity.
What are the main risks of spreadsheet reconciliation?
Manual entry errors, formula errors, key-person dependency, weak audit trails, version control problems, late results and no reproducibility.
When should a firm move to a reconciliation platform?
When breaks roll forward, daily positions arrive late, new sources take weeks to add or past positions cannot be reproduced.
How should firms migrate?
Run the platform in parallel with the spreadsheet, investigate every difference, and retire the spreadsheet only when results agree.
References
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms
- FCA Handbook, CASS 15.8 Records, accounts and reconciliations
About Safeheld
Safeheld reconciles client money every day, resolves every difference and prepares every regulatory return for sign-off, for regulated firms in the United States, the United Kingdom, the European Union, Canada, Australia, Singapore and Hong Kong. To discuss your operations, contact us at safeheld.com/contact.
This article is for general information and does not constitute legal or regulatory advice.