As more and more sales move from cash to card and purchases transfer to the online realm, keeping on top of all credit card sales and settlements is key. Transactions can easily surpass tens of thousands per day and financial risks must be mitigated and addressed without adding to the ever increasing workload of the finance department.
- Over-/Duplicate charging of customers
- Missing or wrong settlements
- Incorrect refunds
- Time-consuming reconciliations on bulk, non-transactional level leading to write-offs
- Timings and cut-off discrepancies between Point of Sales (POS) and Bank settlements
- Several Acquires and Payment Service Providers (PSP) all with different file formats and layouts
Credit card settlement accounts on the balance sheet or in the account receivables are by nature high risk. As the booked sales income and tax, in theory, should match the settled cash value, any remaining balance ought to be documented and specified according to internal control best practices. Discrepancies not related to timing should be dealt with immediately in order to minimise write-offs and prevent P&L impact in incorrect periods.
So, where do you start?
In order to expose and manage exceptions in a structured and automated manner, it is vital to compare and reconcile on a transactional level; breaking down the sale to cash process from relying on bulk sales and settlements to a transactional level reconciliation. This will immediately expose individual credit card transactions causing discrepancies between the sources. Any unmatched items not relating to timing differences can now be followed up directly. Exceptions relating to timing should be matched off in the days ahead as they are acquired. Making this change, however, will involve comparing potentially millions of lines of data, all coming from different source systems in miscellaneous file formats. Manual validation, manipulation and comparisons of such volumes in error-prone spreadsheets should be avoided at all cost.
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Written by Sverre Jarl Enger, Solution Specialist at Adra.