Companies have over the past years integrated payments in flexible and innovative ways to deliver compelling products and services and enhanced customer experiences.
Payment products have helped redefine how financial services are distributed and consumed. They have made financial services more contextual and more accessible in large areas of the economy that have resisted many of the gains of digitization.
Moving money seamlessly within digital software products require significant technical expertise under the hood. This includes everything before the payment acceptance tracking and reconciliation.
Section 1: Introduction to Cash Reconciliation
This is the process of confirming payment accuracy by matching two separate data sources “an internal dataset recording” and your bank’s dataset capturing “actual money movement”. Accounting for that money is a fundamental business responsibility.
Automated reconciliation promotes trust and transparency by demonstrating that client funds are appropriately managed, tracked and attributed, and it delivers delight by enabling money movement to be coupled tightly within software workflow.
Reconciliation in a broad spectrum
Payments are broad and make up several business processes. Here are some of the various forms in which cash reconciliation comes in:
1. Accounting/ ERP
Many companies reconcile transactions within their accounting systems or ERPs against their bank statement transactions. Accounting systems and ERPs are often central sources of truth for invoice and purchase order data.
2. Loan Management Systems
Digital lenders might use loan management systems to capture payment information related to specific loan activity. If a lender is expecting a payment, then the leader will record an expected payment and then reconcile that expected payment against a corresponding transaction on their bank statements.
3. Property Management Software
These systems capture expected rent payments from tenants, which then can be reconciled against bank statements to confirm rent payments receipt.
Section 2: Banks are the riddle.
Reconciliation is important because it underpins a strong product offering a sound business operation. It confirms that a business is accurately managing, tracking, and attributing payments both within their business and on behalf of others as part of their product.
It becomes a different matching game because the banking system introduces data disciplines while processing the payments. This means that the payment message that enters the banking system doesn’t resemble the payment message that exits it.
The main causes of disruptions include batching, timing and data. Whereby as payment rails may take some hours or days depending on payment type for a transaction to clear and settle, hence bank transaction reports do not contain sufficient data to properly reconcile all transactions.
Section 3: Automating Reconciliation
A company must first confirm that it has received their payments by matching payment objects in their internal databases against payments data from their bank.
By using payment software like Churpy Reconciliation, a company can automate their end-to-end payments reconciliation. Churpy Reconciliation offers the following benefits:
1. Customized modules where users set their own rules and what frameworks to look at while reconciling (DIY rule engine).
2. Real-time analytics where data is organized in a single view to understand what is reconciled or not (debtor analytics and CFO dashboards)
3. High- Capacity invoice load (AWS big-data pipelines for scale)
4. OCR PDF remittance advice processing (AI to capture different types of PDF documents across the world)
5. ERP integrations (Offering direct writes into ERP software e.g. SAP ECC, etc)
Book a demo with us today and learn more on how we can help you automate your payment operations at firstname.lastname@example.org.