Understanding payment reconciliation

The process of ensuring sales executed through 3rd party delivery and payments vendors or cash are matching with the actual recorded sales and payments/deposits are received timely.

Importance, Challenges and Best Practices

Importance

• Ensures accuracy of reported revenue
• Identifies discrepancies or errors quickly
• Helps prevent and detect fraud
• Provides accurate data for financial reporting and analysis
• Ensures proper cash flow management
• Supports tax and accounting compliance and audit readiness

Challenges

• Multiple payment channels and partners
• High volume of transactions
• Real-time vs. batch processing differences
• Varying fee structures across partners
• Timing differences between sale, settlement, and bank deposit

Best Practices

• Implement automated reconciliation tools where possible
• Establish clear standard operating process (SOP) to eliminate key man risk
• Perform reconciliations frequently (daily if possible)
• Maintain detailed documentation of all reconciliation activities
• Regularly review and update reconciliation processes as business needs change

Steps

This is a suite of solution catering to the entirety of the reconciliation process from data collection, reconciliation to accounting entries generation.

Data Preparation and Checks

Data Collection and Scenario Interpretation

• Collect data from Point of Sales (POS)
• Collect data from 3rd Party Delivery Platform
• Collect data from 3rd Party Settlement Platform
• Collect data from Bank statement

Anomaly Detection

Identify anomalies and speak to the related departments before performing your reconciliation.

• Identify unexpected fluctuations of discounts
• Identify unexpected fluctuations of commission
• Identify unexpected fluctuations of service recovery

Reconciliation

Sales Reconciliation

Gain clarity if the recorded net sales in your POS tally with your 3rd party reports. Often then not you will find breaks especially for 3rd party deliveries.

• POS vs. 3rd Party Delivery Reports: Matching sales and collection recorded in POS with reports from delivery platforms like Grabfood, Deliveroo or FoodPanda.
• POS vs. Payment Partner Reports: Reconciling POS sales and collection data with reports from payment processors like NETs, Favepay or Bank Credit Card Center.

Payment Reconciliation

Keep a close eye on cash by making sure what you expected to be paid out is paid to you on time and not missing.

• 3rd Party Delivery Payments vs. Bank Statements: Matching expected payments from delivery services with actual payments received.
• Payment Partner Settlements vs. Bank Statements: Reconciling expected settlements from payment processors with actual payments.

Cash Reconciliation

Cash at risk is highly subjected to fraud and abuse. Accumulating a large number pose financial risk to the company. The ability to distribute monitoring to ops manager besides finance team reduces the chances of loss revenue.

• Deposit Declaration: Provide mechanism for your outlets to declare their deposit in a central system rather than sending it thru WhatsApp
• POS Cash Sales vs. Deposit Declaration: Match declaration is inline with POS sales
• Deposit Declaration vs. Bank Statement: Confirming actual cash deposits in the bank statement ties with declaration made

Post Reconciliation

Accounting Entries Creation

Creating accounting entries is largely manual even with the existing solutions in the market where adjustments are often needed and manually created as solutions in the market do not take data direct from 3rd party but POS. Automating from the right source eliminate all manual work and increases accuracy.

• 3rd Party Delivery Entries: Create appropriate accounting entries for delivery service transactions with proper allocation of discounts, disputes, fees and taxes.
• Payment Partner Entries: Generating entries for transactions processed by payment partner.
• Cash Transaction Entries: Recording entries for cash sales and deposits.

Dispute Management

Dispute is often a source of revenue leakage where timely management can reduce the leakage by appealing and clawback the disputes that are not genuine operators issue. At the same time, provide a great source to identify reasons and source of disputes, allowing you to take pre-emptive actions.

• Dispute identification: With all disputes aggregated centrally across multiple 3rd party deliveries, identification is automated and easy.
• Appeal tracking mechanism: Provide a central system to update and track appeal instead of relying on manual spreadsheet tracking.
• Refunds tracking: With data aggregated, automate the tracking of order refunds result that is captured across multiple days of spreadsheet reports.