Payment Reconciliation Process for Retailers and Distributors

Payment reconciliation requires cross-checking payments and invoices against bank statements to ensure that your finances are in order. In the Food and Beverage industry, without proper payment reconciliation, you risk errors, confusion, delayed and missed payments, a lack of accountability, poor business management, and failing business relationships. And if your business takes it a step further and is in the Alcohol Beverage business, things get even more complex.

However, automating B2B payment processes is a tried and true method of managing expenses and income for your business, making it easier to reconcile your statements and simplify your processes. Here’s how. 

What is Payment Reconciliation - For Retailers 

Payment reconciliation for retailers includes scrutinizing your point-of-sale (POS) transactions, deposit reconciliation, and invoice reconciliation. This means you need to monitor day-to-day POS transactions, match them to your bank records, and then match your bank records to invoices. 

There are several hurdles in this process. First, as a retailer, you probably handle both cash and card transactions. Cash goes directly into your register, and you can run the math at the end of the day. However, card payments and wire transfers become  complicated. 

Usually, as a merchant, you rely on third-party payment providers to process payments and update your accounts. However, your bank deposits may not always match your accounts’ reporting. For example, your accounting software from a payments provider may indicate that you've closed $30,000 in transactions, which your customers have paid for during POS transactions. Yet, your bank deposits only show $20,000 at the end of the day. 

These discrepancies are often due to slow and intricate cash transfer processes between the banks that run the fund transfers in the background. Therefore, it's crucial to have a deposit reconciliation system that accounts for cash that's not reflected in your bank account, handles the period it takes for the funds to be processed, and updates it once a transfer happens. This removes the guesswork in payment reconciliation. 

Deposit reconciliation provides peace of mind for AP managers but also helps manage invoices and payments to suppliers. When you have accurate income and invoice records, you can manage your expenses better. 

What is Supplier Statement and Invoice Reconciliation - For Distributors 

Payments to suppliers are some of the largest sources of cash outflows for distributors. As such, reconciling supplier statements in accounts payable is a crucial part of managing your books. Ideally, supplier statements and invoice reconciliation should be a straightforward process. A supplier sends their supplier statement or invoices, and you, in turn, verify the existence of the goods and services as ordered, and you make a payment. Unfortunately, the B2B payment reconciliation process is more tedious than we like it to be. 

Employees in the AP departments are often burdened with overflowing supplier statements and invoices from inpatient suppliers who resend documents. Manual reconciliation steals precious time, lowers accountability, increases redundant tasks, and creates room for costly mistakes. Failed payments, double payments, and missed invoices are a few of the issues that creep up with poor invoice reconciliation for distributors. 

Automating invoice and supplier statement reconciliation improves overall account management. For example, you can match invoices to the correct orders, identify duplicated invoices and statements, correct data entry errors, and highlight missing details. If you notice mistakes, you can contact a supplier to rectify the error before processing payment. The result is painless payment processes –paying invoices, credit, and suppliers on time, avoiding duplicate documents and enhancing business relationships. 

Why You Need a Payment and Invoice Reconciliation Process 

Whether you work as a retailer, supplier, or distributor in the food and beverage industry, you need a reliable payment or invoice reconciliation process to cross-check your costs and income and keep your books in order. Automatic payments and invoice reconciliation enable you to keep accurate records, improve your payments process, and store reliable data for future business decisions. 

How Does It Work? - Best Practices For Payment Reconciliation 

Payment reconciliation has two distinct processes for business. The first is the internal process which focuses on managing records –bills, payments, supplier statements, receipts, and invoices. 

The second part of the process is external. When a payment is made, the bank records the activity. The bank statement shows your income and payments made to suppliers in a given period. The process of reconciliation checks if there are any discrepancies between the invoice in the record and the bank statements. 

Best Practices for Payment Reconciliation 

Weekly or Monthly Audits: Frequent reconciliation makes it easier to maintain accurate records. It's easier for you to remember weekly or monthly transactions instead of quarterly financial activity. Periodic reconciliation also reduces employee workload and helps them avoid mistakes.  

Automate: Automating the reconciliation process reduces errors and processing time, and improves financial auditing. Matching electronic invoices to receipts and purchase orders, and cross-checking against bank statements makes it easier to track business funds. 

Analyze payments per vendor or customer: Cross-check invoices, payments, and bank statements for each customer to identify duplicated invoices, wrongful payments, verify bank account information, and settle missed payments. 

Automation reduces the workload by streamlining financial records and highlighting errors, duplicate or missing documents, and details. Automation also provides a reliable backup for payment records, making it easier to audit your business at any given point and hold people accountable for their mistakes. 

A Payment and Invoice Reconciliation System - What It Can Do For You 

A good payment and invoice reconciliation system  can do a lot for your business. These features can be wrapped up in three key benefits with tangible results. 

1. Save time (and money)

A big part of a payment reconciliation system is automation. You’ll eliminate time spent on invoice paperwork, line item matching, and more. Plus, you’ll save any money used to hire extra help in the accounts payable department. And for those in the Alcohol Beverage business, you’ll save time spent working to stay compliant.

1. Encourage efficiency

A good reconciliation system uses analytics to collect, present and track invoice data and discrepancies in real-time. You’ll always be up-to-date on what’s going on with your invoices without spending time combing through and comparing the numbers. 

1. Stay compliant

If you deal with alcohol in the F&B industry, you know how vital it is to keep tabs on federal, state, and local alcohol regulations. Breaking regulations comes with dire consequences. However, a good alcohol payment solution will keep you compliant in every state you operate in. 

In addition to these key benefits, a payment or invoice reconciliation system also helps you:

• Store all your payment documents in one reliable location for easy retrieval and management
• Reduce errors that arise from manual entries 
• Save time and increase productivity through automation 
• Process payments faster 
• Manage business relationships better by paying on time and settling mistakes
• Hold employees, vendors, and other parties of your business accountable
• Enable your business to scale with efficient resources 
• Streamline processes between various accounting and reconciliation software
• Create accurate reports for decision-making

Find The Right Payments & Invoice Reconciliation Solution 

Streamlining your payments and invoices improves your business by saving money and time. With accurate numbers, you know where your business stands and how best to move forward. 

iControl can help you reconcile hundreds of payments and invoices so you can keep your accounts payable in order. Check out our payment and invoice reconciliation solutions for retailers, suppliers, and distributors and contact us today for a free demo.