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Credit Card Reconciliation: How to overcome the challenges preventing efficient accounting and reporting

As a competitive enterprise, serving your customer base is always a dynamic process requiring constant monitoring of customer experience and preferences as they develop over time. The customer payment field, however, possesses characteristics which have remained constant over time. Despite the growth in new options, credit card use has been the major payment method in use till now and this trend is expected to continue well into the future. The chart below illustrates the preferred payment methods used by consumers as of August 2022 in Switzerland (Source: Statista).

As one of the major avenues through which your enterprise receives payment, credit cards take up a large part of the reconciliation process.

Put simply, credit card reconciliation involves comparing your credit card receipts with statements issued by the bank. Having an efficient system in place which acquires all the right data and allows for accurate reconciliation is the desired target, though not an easy one to implement.

With multiple intermediate steps, credit card reconciliation is certainly one of the more complex types.  You want a set-up which takes into consideration the entire web of payment points your business operates through. Including all cash registers, Webshops, all acquirers, all financial institutions and covering all transaction locations as well.

Manually keeping abreast of the transactions flowing through all these channels can be a challenge. Furthermore, the nature of credit card transactions and the players involved make reconciliation an intricate task.

The challenge: Time delay in receipt of payment

When a customer completes a purchase in your store and pays with a credit card, swiping their card verifies that the credit card provider will then provide your company with the necessary funds. The customer has completed the purchase, however, your company receives the payment only at a later date.

This means there will, therefore, be a difference in the monetary value of sales made and the date the funds are transferred to company accounts.

You now have an open debt in your accounting system which will only be settled after a few days. (based on the contractual terms)

This occurs for every transaction. With the many customers and thus hundreds of transactions your enterprise processes daily, tracking these discrepancies is a real concern. Assessing individual transactions becomes almost impossible since customer payments at the cash register are usually not invoiced, while the credit card provider pays out all the debt from these transactions as a lump sum, at some point in the near future.

The challenge for Auditing

Auditing is an expected and necessary procedure your enterprise must be prepared for. Auditors arrive intending to carry out detailed assessments and look for as much data as possible. With their attention to detail, auditing can be time consuming and costly as auditors request and sort through as many individual transactions as possible.

Add local cards to the picture, and the accounting becomes even more complex, with even more brands in the picture, each with their own terms.

Be a step ahead with Automation

Reconciling credit cards is therefore a complex operation. Successful reconciliation requires comparing two pieces of data and ensuring that they match up to give the same value at a specific date. As we’ve seen this is no easy task with credit card payments.

The best way for your enterprise to retain control and ensure accuracy is with automation. A platform, such as ReconHub, automates data collection from all existing payment sources, collates and presents the reconciled information in a clear, user-friendly format. This effectively means you can link and upload data from all the main players so that you have all reconciliation data pulled into one place.

Your enterprise can then be confident that the values recorded in your accounts are accurate.  

Enabling you to record your cash position and accurately forecast cash flow. For auditing purposes your company is then in a better position to easily provide all the necessary data down to the transactional level.

Implementing continuous reconciliation means you benefit by the adjusting entries continuously being made to the accounting records. These adjustments bring the accounts in line with the supporting evidence. This usually results in fewer audit adjustments at the end of the year, since all issues have already been found and corrected by your accounting system.

Automated reconciliation can empower your enterprise by taking your accounting system one-step further, preparing your financials for auditing and enabling more efficient, strategic business decisions.


If you are interested to get more infos about ReconHub, get in touch with us!  


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