A Guide to Best Practices for eCommerce Payment Reconciliation

Ecommerce these days is trending significantly and fetches the attention of a vast crowd. The eCommerce platform is expanding in a gigantic way and enhancing its sales channel prominently. Such a platform, along with easy access to the process, tries its best to deal with payment reconciliation in a better way.

The companies or industries are heading more towards direct consumers or D2C business models and getting connected more to the omnichannel platform to serve the purpose of the eCommerce sectors.Such payment reconciliation is tough to handle by any eCommerce platform’s finance and accounting team.

The industries or companies these days have a free reconciliation process to handle the in and out of cash appropriately.

• With the advent of the digital market and expansion of the eCommerce platform, customers can purchase products from companies’ websites like Amazon or Flipkart. As per customers, the omnichannel system is quite convenient for shopping purposes.
• The finance team’s work is to collect all the data from the transaction list involving every mode of payment. Other services like buy now pay later, discounts, product returns, third-party logistics fees, different currencies, shipping fees, buyback, margins, and other relatable processes are accessed to manage the workflow.
• The error-prone payment reconciliation faces the most complex challenge in managing the D2C business model and eCommerce platform. Such an eCommerce platform undergoes losses and profits because of reconciliation errors.

Some of the eCommerce payment reconciliation process involves:

Commission

If the sale is made through Amazon, then these eCommerce platforms cut a commission for selling and marketing the stuff.

Payment fee

Such an eCommerce marketplace comes out with the idea of additional charges like closing fees and all on every product to manage the workflow in a better way.

Shipping Charges 

These days marketplaces have come out with shipping services to the sellers and cut the charge from the payment for the sale of the products. Sometimes errors in the product recording may overcharge the shipping fee adversely.

Warehouse fee

`To store the products, the seller needs to get a space by paying some extra amount to make the process easy and convenient.

Discounts

Every eCommerce industry comes out with the idea of providing discounts differently. Either directly through the seller or through commission based.

Statutory Taxes

All taxes like service tax and other relatable services are involved and deducted before paying the seller.

 Steps to follow in eCommerce payment reconciliation

• Standardization of process

The payment reconciliation involves specific steps that involve five categories:

1. Data extraction
2. Compilation
3. Recording
4. Matching
5. Reconciling.

Such a process is followed by any finance team to handle accuracy and get rid of errors and non-discrepancy times following the procedure. The time needed to gather such documents and follow the standardization process to serve the purpose efficiently.

• Establishing Internal Controls

During the eCommerce payment reconciliation process, a sequence of internal checks is required to keep track of the process to highlight any issues, if any. Such internal controls work as per your business nature and can be managed as per the standardized process.

Such a process helps eliminate the risks, establish the integrity of the eCommerce companies, and manage error-free financial statements.

• Automation Adoption

Once the standardizing process is completed, it’s time to execute the payment reconciliation process and allow the companies to adopt economic transformations to be followed automatically.

The automatic payment reconciliation process makes the process error-free and easy to access magnificently. Such workflow is managed with the help of the latest technologies to enhance the sales channel in a better way. Such a process needs to be regularly updated to get the work done simply and more sophisticatedly.

• Key Performance Indicators analysis

Errors at times of payment reconciliation may cause the business financial risk. Such risk helps make eCommerce more efficient, convenient, error-free, and easy to access. Some of the key performance indicators are mentioned below:

• We need to find out the average time to finish the reconciliation process
• Number of qualities of reconciliation performed for the first time
• Number of discrepancies found in every reconciliation

You have to set the process in a loop to get the desired results to get best results.

• Integrated Solutions

The type needs to integrate all the solutions to get the best results. Out of all processes, data analytics is the most challenging part of reconciliation, and this is the process that gets more errors. The finance and accounts team tries to gather as much data as possible to analyze the process and proceed with the transaction lists.

Services include automatically importing data to a marketplace like Amazon, Flipkart, and many more. It also involves transactional reports at different levels, analyses, and workflows. A particular service provider comes out with better solutions to execute the reconciliation process to manage the workflow.

• Upskilling Teams

To ease the payment reconciliation, eCommerce needs to train or skill its workers to implement the process effectively. With the advent of digital accessibility, the eCommerce business model must adopt technology and tools to update clients regularly.

It is mentioned that the finance and account team needs to be trained to get the integrated and automated solutions appropriately based on the performance of the process.

The optimized or standardized payment reconciliation process helps in a better way to get rid of overdrafts, pay hidden fees and financial statements, eliminate risk to some extent, and analyze the economic trends in an accessible way. It also keeps track of in and out of the cash flows. When the reconciliation process is automatic, one can easily accept it and get integrated to get better solutions. In such a case, the F&A team takes a lot of time to analyze the payment reconciliation process and reduce the error or risk.