According to the Federal Reserve, since the early 2000s, using checks as a form of payment has declined from being the primary non-cash payment method to the last form of payment people choose to use, accounting for around 12% of all transactions. Debit and credit cards have become the predominant form of payment across all sizes and industries of businesses, and, because of this, the majority of a company’s reconciliation process now revolves around payment card purchases. Despite how technology has evolved and changed the way consumers pay for things in their day to day lives, accounting departments’ day-to-day lives have remained unchanged.
For many organizations, the credit card reconciliation process has become more complex but failed to evolve with the times and remains reminiscent of how reconciliation was handled before electronic payments were the norm. The process starts when the charges are first received, and the accounting department is given the task of manually matching each of the transactions within spreadsheets to the company’s internal system. When discrepancies arise, the reconcilers are tasked with tracking down what caused these differences and manually rectifying the issue. Whether that issue stems from an internal problem, an issue with the source of the transaction or a dispute caused by the credit card processor, auditors are forced to play a proverbial “whodunit” in the attempt to reconcile their books efficiently. All the while, they’re desperately hoping that they find the cause of the discrepancy quickly so that everything can be resolved on time.
Although historically the manual, spreadsheet-driven way most companies have chosen to reconcile these transactions may have appeared to work, in many ways, the adaption of using older forms of reconciliation tools leaves much to be desired in every aspect of the reconciliation process. Even if you are one of the few who are able to reconcile the transactions correctly, on time and with confidence, the spreadsheet-based approach of reconciling is, by its inherent nature, an inefficient process that forces employees to verify every transaction equally, which is incredibly inefficient. These low-value and high-involvement tasks create an unacceptable amount of risk because of any possible errors that may happen in the process, making companies vulnerable to financial exposure with every transaction. Problems like these are multiplied when companies experience a growth in the number of accounts needing to be reconciled and a decrease in staff over time.
Credit card transactions have helped revolutionize the speed and efficiency in which payments are made in high-volume industries, it’s time to echo those changes by automating your financial processes. Removing the time-consuming manual process of verifying each transaction through the use of automation software guarantees that your reconciliation process is done in a timely, efficient and reliable manner. Spreadsheet-based reconciliation approaches weren’t designed for the sheer volume of transactions that today’s companies face – automating this process allows your company to stop wasting valuable time, reduce the risk of mistakes, and ensure you can keep up with the speed of business today.
To learn more about our automation solution, download our eBook: 5 Steps for Improving Your Credit Card Reconciliation Process.
Written by: Caleb Walter