Reconciliation is a knapsack problem
moderntreasury.com
Reconciliation is a knapsack problem
1–10 of 57 posts
Re: Reconciliation is a knapsack problem
#2This feels like a marketing piece without any good content.
The way it's described, it's not a knapsack problem at all. The knapsack problem is to maximize the total value of the items you fit into the container.
In reconciliation, you presumably want to get the best matching between transactions, which is not defined here, and in any case is a completely different problem.
Ignoring the knapsack comparison, the article doesn't describe why you'd want to check each possible combination. Assuming the individual amounts are correct, you can do each batch separately - no need to check each combination within one batch with each combination of a different batch. (And if you drop that assumption, that still won't be a sensible thing to do).
I can imagine you can have a "scoring" algorithm that gives a confidence score for a match - then if you check every combination, you can pick the combination with the best overall score. But the article doesn't actually describe anything like that.
It also doesn't describe any alternatives to "AI". For example, what about a greedy algorithm? What about alternative methods to do address comparisons? I'm sure there are issues with those, but none of that is described here.
Re: Reconciliation is a knapsack problem
#3This feels like a marketing piece without any good content. The way it's described, it's not a knapsack problem at all. The knapsack problem is to maximize the total value of the items you fit into the container. In reconciliation, you presumably want to get the best matching between transactions, which is not defined here, and in any case is a completely different problem. Ignoring the knapsack comparison, the artic…
Very good points! I was a little confused about what this article was trying to show after taking an algorithms class, but I'm glad to know that I can somewhat justify my confusion (:
Re: Reconciliation is a knapsack problem
#4lol at ai for solving deterministic knapsacks.
Just get yourself a solver.
And if you wanna solve billion item sized problems hire an OR scientist to write a decomposed algo.
Literally after 2 minutes of search: https://arxiv.org/pdf/2002.00352.pdf
Re: Reconciliation is a knapsack problem
#5Are these people selling software to order transactions for maximum fines?
Re: Reconciliation is a knapsack problem
#6As somebody who worked as an accountant, I saw several times where automated reconciliation solutions devastated books with repeat mistakes and lacking audit logs. I saw interns do the same, too.
An automated solution to reconcile statements based on LLM matches removes transparency on how your books are prepared and might create a false sense of trust in the preparation of your books. In case of an audit, people will be in great trouble when their answer is ‘yeah, the AI booked everything.’
I think there is an opportunity here, but I don’t see it ending well until we can put the accountability of your accounts in check.
Re: Reconciliation is a knapsack problem
#7As somebody who worked as an accountant, I saw several times where automated reconciliation solutions devastated books with repeat mistakes and lacking audit logs. I saw interns do the same, too. An automated solution to reconcile statements based on LLM matches removes transparency on how your books are prepared and might create a false sense of trust in the preparation of your books. In case of an audit, people wil…
Sean here, author and EM of the recon team at Modern Treasury. I completely agree, we us AI to surface suggestions to users during manual review so there's full transparency and human confirmation at every step. Our automatic recon doesn't use LLMs for the reasons you outlined.
Re: Reconciliation is a knapsack problem
#8I profoundly disagree that ML models are a good fit for transaction reconciliation.
It’s at least arguable that this task is the oldest documented use of writing, and from double-entry accounting to price/time precedence in modern market microstructure, we have algorithms that align very well with human intuition.
I can think of few cases where gratuitous application of even simple statistical methods would cause more harm than this one.
With all respect, the conversation becomes stupider with every post like this one.
Re: Reconciliation is a knapsack problem
#9Can anyone recommend a reconciliation application they've had a good experience with? My current work place rolled their own recon service. Is this the norm?
Re: Reconciliation is a knapsack problem
#10This feels like a marketing piece without any good content. The way it's described, it's not a knapsack problem at all. The knapsack problem is to maximize the total value of the items you fit into the container. In reconciliation, you presumably want to get the best matching between transactions, which is not defined here, and in any case is a completely different problem. Ignoring the knapsack comparison, the artic…
Very good points! I was a little confused about what this article was trying to show after taking an algorithms class, but I'm glad to know that I can somewhat justify my confusion (:
If you’re in an algorithms class addressing either partial or 0/1 knapsack (or even a computation theory class getting into if and when to break out a SAT solver), listen to the professor and not anyone talking about AI.