The Importance of Transaction Reconciliation

The constant change and evolution of payment systems, together with the numerous innovative payment types that are being introduced to the market, bring multiple reconciliation challenges to light for finance teams around the globe.


Gone are the days where Excel could be used as the only tool to monitor and facilitate transaction reconciliation. Card transactions alone contribute to the bulk of transactional volumes; thus, businesses are required to evolve using automated reconciliation tools for reconciliation. 


The ability to minimise financial administration overheads and to reconcile transaction data efficiently, is of paramount importance to all businesses. Below are some of the main reasons why transaction reconciliation is business critical:


1. Monitoring, reporting and analysis of the transactional landscape - the ability to have dashboards and reports that contain information on transactional data per acquirer or service provider, provides not only insight into customer behaviour, but is required to ensure all fees and commissions payable are calculated correctly. Delays in settlement are closely monitored and reported on to ensure monies are tracked.


2. First line of defence in terms of fraud detection or when large scale exceptions occur - gain insight into missing, duplicated transactions, system errors or transactions simply due to human error or fraud attempts.


3. Reputational damage - any environmental or production issues that have an impact on customers, can be managed effectively as the extent of the impact is known. In return, this results in better customer service and limits reputational damage.


4. Financial integrity - automated reconciliation tools assist with removing the human intervention element and provide reporting for audit purposes.


5. Identifying discrepancies or errors in data entry - auto importing of data alerts to any discrepancies immediately.


6. Avoid excess fees and loss of revenue - through daily reconciliation, any transaction issues can be raised to the acquirer or third party immediately without running the risk of unnecessary chargebacks (that attract fees) or batches unable to be released due to errors or data issues.


The objective with transaction reconciliation in the EFT and VAS (Value Added Services) domain, is to ensure that the final status of a transaction is the same across the channel (POS, Web, Mobile, kiosk etc) that initiated the transaction and the VAS or EFT application that ultimately authorised or processed the transaction.


Innervation offers a fully automated omni-channel reconciliation tool, that offers the flexibility to add new and innovative transaction types to any business, supports finance teams during their financial close periods, and provides instant visibility of the current financial status.  


Reconciliation does not necessarily have to be a tedious, complex process; the key is to adopt new principles and tools with a leading technology partner to support the business.