how automating reconciliation can save you hundreds of dollars every month
TRANSCRIPT
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But first,
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What in merlin’s beard is Account Reconciliation?
But first,
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To understand this, let’s take a look at a very basic and everyday process for most companies.
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For most online businesses, transactions are made online and processed by a Payment Gateway.
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The Books
The information about invoices sent to your customers.
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The Gateway
The details of the transactions from the payment gateway.
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The Bank
The credit statementfrom your bankaccount.
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But here’s the catch. The customer’s invoice information at the books look like this:
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Invoices/TransactionsCustomer 1 - Invoice 001 - $99 - Paid on 2nd Jan
Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan
Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan
Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan
Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan
But here’s the catch. The customer’s invoice information at the books look like this:
Total = $495
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And the statement from the bank looks like this:
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And the statement from the bank looks like this:
Bank Transactions
Sum of $490 credited to the account on 4th Jan
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And the statement from the bank looks like this:
Bank Transactions
Sum of $490 credited to the account on 4th Jan
$495 $490
Unreconciled data:
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This happens since the gateway transfers the amounts
in bulk to your bank account at the end of the day or after a few days.
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Also, the Bank Transaction Statement doesn’t contain key information like:
The details of customers who have successfully made the payment
The transactions that are still in the process
Gateway processing fees
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Hence it's necessary for a method to reconcile the information gap between the Books, and the Bank, with the information from the Gateway Statement.
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As we speak, accountants are spending
hours upon hours of their time doing this process of Reconciliation manually.
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They are desperately muddling through huge amounts of data from various sources (Billing System, Gateway Statement, Bank Statement) in an effort to reconcile payments.
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Here’s how Chargebee has solved the problem for you.
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We aggregate all the necessary information in one place for easy comparison and reconciliation.
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We do this by introducing a Gateway Bank Account into your accounting (Xero/QuickBooks) software.
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We do this by introducing a Gateway Bank Account into your accounting (Xero/QuickBooks) software.
Here’s an overall flowchart of how we do it.
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Xero/QuickBooks (The Books)
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Reconciliation inside Xero
Review and click on OK
Now, find the most probable matches without digging into oceans of transactional details.
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Before Reconciliation
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Invoices/Transactions
Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan
Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan
Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan
Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan
Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan
Bank Transactions
Sum of $490 credited to the account on 4th Jan
Total = $495
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Invoices/Transactions
Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan
Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan
Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan
Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan
Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan
Bank Transactions
Sum of $490 credited to the account on 4th Jan
Total = $495
Unreconciled data!
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After Reconciliation
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Invoices/Transactions
Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan
Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan
Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan
Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan
Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan
Gateway Statement
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Processing Fee - $5.00
Transfer $490 to Bank account on 4th Jan
Bank Transactions
Sum of $490 credited to the account on 4th Jan
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Invoices/Transactions
Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan
Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan
Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan
Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan
Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan
Gateway Statement
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Transaction processed, for $99
Processing Fee - $5.00
Transfer $490 to Bank account on 4th Jan
Bank Transactions
Sum of $490 credited to the account on 4th Jan
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Thus, Chargebee helps you with Reconciliation of payments and clears the information gap between the Books and the Bank.
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Happy?
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Happy?
Wait, there’s more!
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You can now use Chargebee’s Google Chrome Plugin to automate the Reconciliation process, no more clicking a 1000 ‘OKs’.
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You can now use Chargebee’s Google Chrome Plugin to automate the Reconciliation process, no more clicking a 1000 ‘OKs’.
Now, reconcile with just a click of a button!
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Ta da! You just saved yourself 5 work hours every week, with efficient Reconciliation methodology in place.
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Ta da! You just saved yourself 5 work hours every week, with efficient Reconciliation methodology in place.
A small back of the envelope calculation of the possible amount saved (depends on the size of the business):5 hours * 30 dollars per hour = 1500 dollars per week
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To read more about Xero Reconciliation in Chargebee, go to:
https://www.chargebee.com/docs/xero-reconciliation.html
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