Reconciliation challenges faced by enterprises

Reconciliation enables enterprises to detect mismatched transactions between accounting books and bank accounts. However, when working with multiple PSPs and with a multitude of revenue streams flowing in and out of accounts, payments reconciliation becomes complex. In these cases, even the world’s most established companies might struggle to reconcile payment data quickly and accurately. They must first grapple with different cut-off dates for partners and PSPs, different report types, data formats, naming conventions, and countless other variables.

Consider this: An international marketplace may work with multiple sellers from different countries to provide services or an e-commerce merchant may work with multiple vendors to receive supplies. The payments sent will likely vary in value and frequency. At the same time, funds may also be coming into their account from customer purchases, further affecting account balance as these transactions are processed.

As a result, as your payment system grows in complexity, so does the task of reconciliation. This article will discuss payment reconciliation and three of the top challenges associated with it. Keep reading to learn what your enterprise should focus on when designing your reconciliation strategy and how Payrails can help.

The challenges of reconciliation

For enterprises, the challenge of reconciliation can be significant. They not only have incredible amounts of data to process, but they are also often continuously expanding their offerings, reach, and functionalities. That means there is a seemingly exponential amount of data to consider.

Enterprises face three main challenges with reconciliation: data consolidation, discrepancy management, and audit visibility. When done manually, these challenges can become even more problematic and error-prone.

‍Data consolidation

Data is received from several different providers and sources, and it often comes in a variety of formats – and all of this data should be recorded in accounting books and become part of the reconciliation flow. This includes data from marketing incentives, chargeback losses, settlement amounts, partner payables, and refunds.

Here, the first step is simply compiling all of that financial data in one place. Then, it must be standardized so that it can be properly analyzed. 

“Keeping track of your payments and payment data is crucial,” says Patrick Bellinghausen, VP Finance at Payrails.  “Without a robust and automated reconciliation capable of providing total accuracy, it can be difficult to scale an enterprise globally.”

To solve the data collection problem, you will need a powerful automated system capable of capturing data in real time, unifying the various data formats and conventions, and distributing the respective data to the accounting system in the appropriate way. With the proper reconciliation software solutions on your side, you can avoid the manual efforts required to move data between different Excel files.

Discrepancy management

Accuracy in accounting is crucial for reconciliation. When data is moved between different locations and shared between multiple parties without the proper checks and balances, it can be easy for inaccuracies to occur and go unnoticed. This is why it is best for as much as possible to be automated. AI can be immensely helpful, ensuring that data is standardized and consolidated quickly and with a minimal likelihood of new errors. While there are various edge cases that force manual corrections, a largely automated system is much more reliable.

Audit visibility

In any reconciliation process, the traceability of your financial history and transactions is essential for completing successful and accurate audits. It helps to have an audit trail that offers real-time visibility. This often goes hand-in-hand with your accounting strategy, as you need a record-keeping system that is thorough, complete, and reliable.

How Payrails helps streamline payment reconciliations

Here at Payrails, we help our clients by offering an advanced form of reconciliation that makes it easy to address these challenges and boost financial visibility. With these features, you will be able to:

• View unified fee analyses: Get a complete view of fees across all payment providers and payment methods, including custom views that dive deeper into a specific topic or cross-provider insights to support your routing strategy optimization.
• Identify anomalies: Identify and correct unexpected charges. Use anomaly detection to quickly spot outliers, eliminate manual data analysis, and quickly challenge and resolve overcharges with Payment Partners and Card Networks.
• Discrepancy and mismatch notifications: Get a clear view of payment discrepancies and gain insights into the business factors that could be influencing data matching rate.
• Settlement reconciliation with your order data: Compare and verify your settlement file with orders to ensure you are on track with cash-flow projections.

Payrails helps you simplify and streamline your reconciliation process at scale. Get started with Payrails now and schedule your free demo today.