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The Future of Account Reconciliation and E-Commerce For Retail

How COVID-19 Has Changed Expectations of the Office of Finance for Retail Organizations

In the last decade, the consumer experience gradually began to make the transition from traditional brick-and-mortar stores to a virtual buying experience. Though experts and retail organizations had started to realize the demand and significance of e-commerce to their growth and future, the 2020 impact of COVID-19 suddenly accelerated that demand exponentially.

When the CDC encouraged the use of cashless payments to slow the spread of the virus, cash withdrawals from ATMs dropped 25%. In late March, 25% of business owners reported a significant rise in contactless payments. This number has undoubtedly increased since then, as more businesses have set systems in place that allow their business to stay open during the crisis, and these will continue to be expected by consumers long after the COVID-19 vaccine is developed.

However, although organizations have adapted to the shift in demand on the consumer-facing side, their internal teams struggled to keep up, especially if they are using manual approaches and spreadsheets for processes like account reconciliation. Spreadsheets were not made to handle organizations’ finances, especially when considering the complexities of the current e-commerce market.

Account Reconciliation, Credit Cards and 3rd-Party Systems

Credit cards now make up 82.1% of all retail transactions because of COVID-19 guidelines. While that number itself is only a small increase from January, the organizations that are processing these transactions have shifted. For example, consumers rely more on 3rd-Party food delivery services like Door Dash, Uber Eats and Favor than before the pandemic. In fact, so much of these restaurants’ revenue is now generated from these services that state lawmakers have issued regulations to lower the fees they charge restaurants.

For retail and restaurant operations struggling to adapt, this has added an extra layer of complexity to the account reconciliation process. Before the pandemic, accountants were matching the point-of-sale transactions, with credit card transactions, to bank statements, with the biggest pain being managing the credit card fees. One-to-one matches, two-to-one matches, and even three-to-one matches were all passable, although extremely inefficient, with spreadsheets.

However, because of the pandemic’s impact, retail accountants have had to manage not only the existing complex matching, but also reconcile the data from third-party delivery systems such as GrubHub or Amazon, and third-party payment systems like PayPal and Square. Performing a traditional account reconciliation process with all these new elements results in lost revenue, the potential for increased fraud and write-offs.

Moving Beyond Spreadsheets

The limited functionality of custom-made macros in spreadsheets is no longer enough to handle these elaborate factors. There isn’t enough visibility and control to be able to properly catch errors, bottlenecks, and more in the financial close. Additionally, the manual processes that accountants have to perform to support their siloed spreadsheet systems are inefficient and time-consuming.

Before the pandemic, finance and accounting departments had struggled with the deadlines of the close cycle and the resulting financial reporting, but— although difficult— meeting the deadlines was manageable. After the pandemic, those deadlines became far-fetched with the new amount of work to complete. This places a new level of risk on organizations, not only with compliance but the revenue quotas that organizations have to meet.

The Office of Finance requires financial automation in order to be able to keep up with the future of the retail industry. Consumer behavior that emerged because of the pandemic will continue long after vaccines are distributed. Why eat inside a restaurant when you can have the convenience of dinner delivered to your porch? Why take the time and energy to grocery shop in person when you can order and pay online?

Only financial automation like Adra by Trintech will be able to keep up with this new level of e-commerce demand on finance and accounting. The Adra Suite is an end-to-end financial close solution that integrates with your ERP. DATAflow by Trintech automates the data retrieval process and Adra Matcher and Balancer automates the bank to General Ledger reconciliations. This allows your team to focus on the exceptions, rather than the transactions that require no extra effort to match. The Suite’s ability to look into the details of the financial close ensures that transactions can’t simply slip off your radar and result in a preventable write-off. The dashboard in Adra Task Manager tracks and displays the progress of each task and the overall close so your team meets every deadline without working nights and weekends.

Explore how the Adra Suite can help your organization advance and automate to be better prepared for the future.

Step into the future of account reconciliation with Adra

Written by: Ashton Mathai