No matter how large or small an e-commerce company is, payment reconciliation poses a unique set of problems for everyone. Let's evaluate why it's crucial for your business, as well as the underlying difficulties linked with reconciling payments on multiple e-commerce platforms.
The process of payment reconciliation is an integral part of the reporting cycle. It gives you a comprehensive view of the cash flows in your company, assists you in finding inconsistencies, and is an important indication of the financial sustainability of an enterprise. In general, it is necessary for accurate, timely, cost-effective, and relevant financial reporting as well as commercial planning.
Although running an online store gives the impression of being simple at first glance, the reality is that it involves a number of intricate financial considerations. There are a lot of payments involved in buying and selling a product. This frequently makes the process difficult for company owners.
Also, reconciling payments is among the three most time-consuming operational tasks for small businesses, while it ranks fifth for big enterprises Selling on several marketplaces, various payment options having different time frames, different file formats, and the ability to provide refunds are all factors that contribute to these challenges. Now, let's take a more in-depth look at each of the problems.
Employing the services of more than one marketplace is a standard practice among e-commerce businesses. Having several marketplace partnerships comes with a number of benefits, some of which include scalability, resilience, and decreased costs, in addition to a great number of other perks. However, the vast majority of marketplaces have their own distinct fee and settlement arrangements. These varying underlying structures make reconciliation more difficult.
Files are often delivered in a variety of formats, such as CSV, Excel, PDF, and even text (.txt), making the conversion process even more time-consuming for businesses. Depending on the payment methods, each of these files arrives at a different time via emails, SFTP (Secure File Transfer Protocol) or APIs, making the process more time-consuming and complicated.
Shoppers place a high value on fast refunds, and e-commerce businesses have therefore come to appreciate the relevance of timely returns in sustaining the customer value proposition. Charge-backs and refunds, on the other hand, add extra complexities to the payment reconciliation process. The accounting department must also filter through a jumble of reconciliation files and bank statements as a result of refunds and charge-backs.
When an online retailer achieves a certain level of success, it may be difficult for finance and accounting professionals to have a good grasp of the specifics of the company's payment processes. You will need a system that is dependable, powerful, and well-proven in order to automatically manage, for instance, commission fees, discount percentages, and taxes amongst the many online marketplaces, payment services, and suppliers that are engaged in these complicated financial cycles. As a result, merchants no longer have to deal with the hassle of manually reconciling all of their financial data on a spreadsheet.
A standard payment reconciliation system for e-commerce like LogiRecon may keep tabs on a wide variety of the company's payments and deductions, including the following:
1. Shipping overcharges
2. Commission overcharges
3. Return commission mismatches
4. Closing fee discrepancies
LogiRecon will make it possible for you to automate the process of reconciling and matching your transaction data across all of your online marketplaces, as well as centralise all of your transaction data. It provides you with better knowledge and transparency over the whole operation, as well as the ability to react swiftly and precisely in the event that any faults are discovered.
LogiRecon enables you to take charge of your operations by providing an interface that is easy to use, particularly a dashboard that gives you a bird’s-eye view of your reconciliation processes. This allows you to see all of your transaction streams at a glance.
A common mistake people make when dealing with complicated situations, particularly in the e-commerce business, is to completely trust the marketplace's payment methods. In today's e-commerce environment, checking the settlement system’s potential faults has become critical. Emerging and established sellers must have an efficient process or solution like LogiRecon to manage their payment reconciliation.