Sales Reconciliation Process: POS Steps & Automation Tips

For any retail business, the sales reconciliation process is vital to understand how money is flowing in and out of your business. While you may already be performing various types of reconciliation as part of your month end close, point of sale reconciliation can add an extra level of certainty in regard to your business’ finances.

This is especially vital for businesses that are receiving revenue from multiple payment providers. Additionally, any business struggling to reconcile their accounts in a timely or accurate manner or scale their operations due to the delays of reconciliation stand to gain so much from automating the sales reconciliation process.

In this article we will take a look at the sales reconciliation process in detail and see how automation can make a world of a difference in its execution.

Coming Up

1. What is Reconciliation?

2. What is Point of Sale Reconciliation?

3. What are the Benefits of Point of Sale Reconciliations?

4. What are the Steps in Point of Sale Reconciliations?

5. What are the Methods of Reconciliation?

6. What are Best Practice Tips for Reconciliation Accounting?

7. When is it Best to Perform Point of Sale Reconciliations?

8. Ready to Reconcile?

What is Reconciliation?

Reconciliation is the accounting process of matching transactions internally against external statements and documents. The purpose of reconciliation is to check that the two sets of records and figures are in agreement. This way, you can move forward with confidence in knowing that your financial records are in order.

What is Point of Sale Reconciliation?

For retail businesses, your finances are one of the determinants of your success and ability to stay open. So, you’ll want to make sure that everything is in order, all the time.

That’s where point of sale reconciliation can be a great help. Point of sale reconciliation is the process of checking your POS sales records against your cash in hand and credit card processing statements.

By doing so, you’re able to make sure that the money you have spent is what has left your POS account.

What are the Benefits of Point of Sale Reconciliations?

Like the cash reconciliation process and general ledger reconciliation, many benefits stem from handling your point of sale reconciliations in a timely and consistent manner.

Here’s a look at some of the advantages you stand to gain:

1. Remove Accounting Errors

Humans are bound to make mistakes. No matter how experienced or meticulous your accounting team is, errors happen. Errors become more likely as your transaction volume grows and you work with multiple payment providers.  

With POS reconciliation, you’ll be able to quickly spot errors before they get too big to handle. Automation can help reconcile accounts in a fraction of the time it’d take to do manually, prevent errors from spiralling out of control, and increase visibility into the process.

2. Pay Bills On Time

You have a lot on your plate while running a business. It’s possible that you’ll forget to pay a bill here or there. With POS reconciliation, you are able to better manage and oversee your cash flow. This way, you’ll have an up-to-date view of your cash on hand and even be able to automate bills to debit on a set schedule. You’ll be able to say goodbye to overdraft fees.

3. Identify Fraud

You may not want to admit it, but it’s always a possibility that your own employees can commit fraud or theft from your business. With the point of sale reconciliation process, you can easily identify unauthorised or unwanted transactions with all the proof you need right in front of you.

4. Improve Supplier Relationships

With POS reconciliation, you have a firm grasp of your cash on hand. With this capability, you know that you are able to cover your costs and pay bills to suppliers on time. When you reconcile regularly, you can safeguard your business by knowing your financial health is accurate and reflective of your revenue and expenses.

What are the Steps in Point of Sale Reconciliations?

With POS reconciliations, there are a lot of moving parts. This is especially true as customers have increasingly more payment options and retailers offer buy now, pay later financing plans.

Here are the basic steps for point of sale reconciliations:

1. Collect and Compare Records

Gather all your documents, including internal account register, bank statements, credit card statements and any other materials you’ll need. You’ll then cross-reference transactions between your internal account register and external documents to mark them off as matching.

As you know, this can quickly become a time-consuming task if your systems are disconnected. Consider using an automation solution to pull and collect data for you so that you can save a lot of time and improve accuracy.

2. Identify Transaction Exceptions

There are some transactions that you won’t be able to cross-reference as they won’t appear or match up. These may include ATM charges, overdraft fees, uncleared checks, and automated payments that have yet to be cleared by the bank. Highlight these items and be sure to deduct them from your total balance displayed on your bank statement.

3. Verify Incoming Funds

Review your internal records to cross-check for credits and deposits with your bank statements. If anything has yet to be confirmed by your bank, add them to the balance on the bank statement. Additionally, if the bank displays deposits that have yet to be reflected internally, add the entries to your internal records so that it matches up with the bank.

4. Rectify Errors

If you notice mistakes on the bank statement, contact your bank immediately to fix the error.

5. Update Records

Once your internal ledger and external statements are in agreement, the reconciliation process is done! Be sure to add any notes to save what changes were made so that you can refer back to them during your next sales reconciliation process.

What are the Methods of Reconciliation?

To reconcile your accounts, you can choose between two main methods, which include:

1. Document Review

The most popular way to reconcile accounts is to review documents and existing transactions against one another. SolveXia is an automation solution that can do this for you. SolveXia will collect all your data as the system integrates with your existing toolstack and all payment providers like Amazon, Stripe, Worldpay, and Shopify.

Then, the system will perform transaction matching in a fraction of the time you’d have to do so manually. If there are any discrepancies, you’ll be notified to investigate so that you can make sure all documentation aligns.

2. Analytics Review

To conduct an analytics review, you’ll reference your historical activity to estimate the amount that you’d expect to be your ending balance. Analytics review makes note of the cash account or bank statement to notice any errors or irregular activity.

What are Best Practice Tips for Reconciliation Accounting?

When dealing with your sales reconciliation process, keep in mind the following best practices and things to remember:

1. Remember Interest

If you execute sales reconciliation after your statement date, don’t forget about any interest that has accrued.

2. Leverage Technology

When it comes to most accounting processes these days, automation and technology can be your saving grace. Automation solutions like SolveXia cut down your reconciliation time and prevent manual errors.

You’ll be able to effortlessly reconcile across all types of payment processors, PayPal, Shopify, Afterpay, bank accounts, your ERP, and more. With a unified data platform and executive dashboards, you can add visibility, accountability, and transparency into your process.

3. Consider Delays

It could also be the case that some payments take a few days to process, so you may not see them just yet on your monthly statement.

When is it Best to Perform Point of Sale Reconciliations?

The nature of your business will inform your sales reconciliation process more than anything or anyone else can. That means, if you’re dealing with a high volume of daily transactions, there’s greater value and a stronger need for more frequent sales reconciliation such as daily.

Most financial institutions send out their statements on a monthly basis, so at the very least, that’s when you should be performing point of sale reconciliation.

With automation software like SolveXia, you’ll feel empowered and enabled to perform reconciliations consistently as the software handles all the busy work for you.

Ready to Reconcile?

Completing your sales reconciliation process regularly can help to spot fraud, reduce manual errors, and keep a steady hold on your business’ cash flow and financial status. You’ll be able to prevent bigger problems from occurring in your business and gain a clear look at how your business is functioning.

With automation tools like SolveXia, you can connect to all your payment systems and alleviate your finance team’s workload, ensuring that they have the time they need to focus on high-value and strategic tasks.

To see how a tool like SolveXia can perform your reconciliation needs, schedule a demo to learn more.