Advancements in the payment industry is now growing faster than ever. Keeping abreast of these developments has become a constant challenge, with new players constantly popping up, both locally and internationally. Traditional banks, fintech companies, digital banks, large tech companies and retailers have all joined the trend for a piece of the industry. For your enterprise, adopting as many of these payment providers as possible is usually the best path for successfully competing in the current environment.
This need to support larger and larger numbers of payment providers consequently makes accounting for and reconciling your business transactions a complex process.
In Germany, Switzerland, Austria and across Europe in general, common payment methods frequently used for E-commerce payments include: Paypal, Klarna, Amazon Pay, Giro Pay, Bluecode, Apple Pay and Google Pay. When using these payment methods for business transactions, it is important to properly reconcile the payments so your financial records always remain accurate.
When a customer pays with the selected Ecommerce provider, the provider first holds the funds in your virtual account with that provider. So, for example, if a customer pays with Klarna, the funds are initially transferred to your Klarna virtual account, before being credited to your business bank account.
This is significant for accounting purposes as it means there will be a discrepancy between the revenue in your bank account and the value in the Klarna account on the transaction date. Additionally, an inflow of that revenue will be seen at a later date.
The commission taken by the E-commerce provider also needs to be accounted for. The revenue value in your accounts from the ecommerce provider will therefore not be the full amount recorded in the initial customer transaction statement.
Putting it all together, the reconciliation process involves matching the payment amounts, dates and relevant details to ensure everything matches up. Any discrepancies would then be investigated and resolved so you continuously maintain the accuracy of your financial records.
Having an easy system to account for and reconcile transactions from multiple payment providers keeps you a step ahead and helps you stay competitive in the global economy. Today, the E-commerce industry has no borders. Limitations do exist, though, for companies unable to adapt and account for the myriad of global transactions.
To successfully operate your business internationally, you not only need the capability to offer payment methods which customers around the globe use, but also the ability to efficiently reconcile those transactions, so income owed to you is not left uncollected.
Selling to the global market consequently means you need to work with different payment providers, the benefits of which impact your business now and in the future. Partnering with multiple E-commerce providers enables you to:
One way to make the reconciliation process easier is to use reconciliation software or tools such as ReconHub by Abrantix. These help automate the process by extracting and comparing the transactions in your financial records with those in your payment provider account and identifying any discrepancies which need to be investigated. This saves time and reduces the risk of human error.
Finding the most efficient system for reconciling Ecommerce transactions is an important step your business must take toward maintaining the accuracy of your financial records. Using reconciliation software or tools helps streamline the process and minimize the risk of errors.
With a sturdy reconciliation software your enterprise is prepared for the future. Your business has the flexibility to accept new ecommerce payment providers, the openness to join new marketplaces and security in knowing that incoming revenue is maximized.
So, no matter how much the payment market changes, your business has the tools to succeed.
To learn more about how ReconHub can streamline your reconciliation process, contact us!