Last editedJun 20222 min read
When it comes to business finances, ensuring that everything adds up is absolutely crucial if you want to run a successful and scalable company. In a nutshell, this is what payment reconciliation achieves. Reconciliation refers to the process of going over all of your costs and sales, ensuring everything is recorded properly.
Proper reconciliation is the only way to accurately manage cash flow while also finding and solving errors before completing an end-of-year statement. It’s a task that traditionally fell to the accountancy department, but with so many smaller businesses now unable to afford such services and larger businesses facing increasingly complex accounts, payment reconciliation software helps shoulder the burden.
What is payment reconciliation software?
Most payment reconciliation work involves comparing your internal data with external documents from customers or suppliers, and ensuring the figures match. This was a job once referred to as ‘balancing the books’ with an accountant literally going over balance sheets or spreadsheets, but with the advent of technology and advanced AI algorithms, automated software now makes quite straightforward what was once a laborious task.
The payment reconciliation process
While it might seem like overkill for some, payment reconciliation is a necessary process that provides your business with a reliable audit trail that stands up to even the most stringent scrutiny. The data you reconcile includes the following transactions:
Bank – Your bank and credit statements and online transaction history. This is easily synced to your accountancy software.
Customer – Perhaps the most complex part of the process, the details of every individual transaction are compared to the summary in your accounts receivable. This is the part where most discrepancies (if any) will be found.
Supplier – Match the statements provided by your supplier to the balance owed. Not all suppliers provide statements, so you might need to ask for them.
Of course, there are dozens of other costs to be taken into account depending on your sector and the specific nature of your business. Regardless of your business size or sector, the payment reconciliation process typically results in a reconciliation report quantifying and elaborating on any discrepancies. These reports can also be generated automatically by the right kind of software.
The best payment reconciliation software
Payment reconciliation software offers automatic reconciliation for businesses, giving them real-time balance checking power and ensuring absolute accuracy. For our money, the best accounting software for payment reconciliation is as follows:
The automated operating system employed by Xero is among the most resilient and reliable around and has been designed specifically with small businesses in mind. It integrates perfectly with payment systems like GoCardless and also offers a mobile app for keeping tabs on your reconciliation on the go.
The cloud-based accounting solution that operates from a neat centralised dashboard allowing you to collect all of your KPIs (Key Performance Indicators) in one place, QuickBooks is an incredibly powerful accountancy ecosystem for businesses of all sizes. This is an in-depth and powerful alternative to Xero for those businesses looking to scale quickly without making any financial mistakes.
Sage is the complete package solution with a simple and elegant user interface that’s won millions of loyal customers. However, it is more expensive than competing products and won’t integrate with your online payment solutions as efficiently.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. It integrates seamlessly with over 300 partners, including major payment reconciliation platforms like Xero and QuickBooks, putting payment visibility right into the middle of your business workflow.
Find out how GoCardless can help you today with one-off or recurring payments.