Why Automated Payment Reconciliation Is The Need of The Hour

September 19, 2021 | 5 MIN READ

With the rapid growth of IoT, advancements in technology, and the frequent introduction of new eCommerce platforms, the eCommerce landscape has witnessed a paradigm shift. Today’s tech-savvy customers’ inclination towards multi-device usage, browsing products, and compare prices online and the need for seamless, and hassle-free product purchase experiences, have fuelled the commercial ecosystem. While most retailers and eCommerce brands have been relentless in offering their customers hyper-personalized buying experiences, payment reconciliation still remains a challenge.

What is Payment Reconciliation?

Let’s first get to the basics. Payment reconciliation essentially refers to the process of verifying bank statements against the company’s accounting records to ensure the transaction payment amounts match. Any discrepancies in the internal cash registers and external payouts open up financial leakages for the eCommerce company.

What leads to Payment Reconciliation Challenges?

The more the customers are looking for hassle-free, and personalized experiences, the more the retailers and brands have to cater to the multi, and omnichannel shopping needs, and the aspects that entail.

Here are some of the common scopes or arenas for money leakages that may take place in the absence of an automated payment reconciliation system.

Shipping Overcharges – At times, the customers’ delivery locations can be a bit too far that may entail a higher shipping charge. There could be additional shipping costs involved if the retail brand is relying on a third-party vendor for product shipping.

Commission Overcharges – Online marketplaces charge brands for each product sales as well as web-hosting, etc. There could be instances where the commission might be incorrectly charged. Without a payment reconciliation system in place, it’s quite daunting to trace and rectify such overcharges. If left unreconciled, such scenarios may lead to severe profit leakages for retail brands.

Pick & Pack Overcharges – When the product under consideration is a fragile or perishable one, pick-packing takes precedence. And, for such processes, retail brands have to pay a considerable amount to the packaging vendors. It’s essential to lay some ground rules for appropriate packaging charges to avoid profit leakage concerns.

Deductions – Online marketplaces have their set of standard charges and deductions, and these are the prominent leakage scopes. While deductions such as taxes are fixed across the platforms, the discounts and shipping-related charges may vary from platform to platform.

Closing Fee – Most marketplaces have a closing fee set for each product is a part of their catalogs. These closing fees need to be reconciled.

Payment Reconciliation Types

Payment reconciliation is not a nascent concept. Retailers have always been comparing their internal bookkeeping records with external vendor payments to identify scopes for mismatch in payments. However, this conventional mode of payment reconciliation is no longer appropriate or convenient when retailers have to manage product order fulfillments in bulk. The conventional reconciliation methods are prone to human error.

Some of the other key challenges associated with conventional payment reconciliation systems include:

Reconciliations are complex tasks and it can be overwhelming to manage when the transaction volume is high
Accounting for payment, price difference, and product inventory can get challenging, especially if there are multiple listings involved
Marketplace deductions may vary depending on the policies, and when done manually, reconciling payments can be daunting
Lack of transparency
Time and resource-intensive process

The eCommerce landscape is ever-evolving and the transaction volumes are expected to go up in the foreseeable future. So, the need for robust, and scalable payment reconciliation will be there. Here comes the role of an automated system.

Benefits of an automated payment reconciliation system

Here are some of the key benefits of leveraging an automated payment reconciliation system.

Less scope for manual error: An automated payment reconciliation system derives data directly from various sources. So, there is less scope for manual, and erroneous data entry.
Maximizes time and productivity: Payment reconciliation can be performed in a matter of minutes. Whether it’s a document or analytics review, retail brands will be alerted to any anomalies or discrepancies as they are found.
Centralized data: No more scattered data across systems. An automated PR system allows all payment-related data to be stored in a centralized cloud directory, which paves the way for any time, anywhere access.
Auditing and compliance: With all data being stored and recorded for audit trails, retail brands can keep compliance risks at bay.
Accurate eCommerce transactions
A 360-degree view of online, and offline payments

How Vinculum Can Help?

Vinculum has been relentless in crafting and offering cutting-edge, tech-enabled products, and solutions to brands to assist them in their growth journey. VinReco is Vinculum’s AWS cloud-based Payment Reconciliation system that has been globally recognized for effective accounting and reconciliation of enormous transactions, complexities of shipment, and returns.

VinReco has been instrumental in reconciling 80 million orders to date and identifying financial leakage worth 20 million. 1200+ brands from electronics, fashion & accessories, home furnishings, beauty & personal care as well as FMCG industry verticals have leveraged VinReco for automating their payment reconciliation processes.

Here’s why VinReco is ideal for retail brands for today, and tomorrow.