With today’s technological capabilities, it’s now possible to take almost any “analog” process and make it more efficient using an automated digital process. The same is true in managing your electronic payments. Improving your payment management processes can deliver cost savings and provide a higher quality and higher value service to the business. In other words, it’s the age-old goal of doing more with less.
Don Kesner, Senior Product Director, First Touch Payment Solutions
The Manual Process of Merchant Account Reconciliation
Every business reconciles their bank accounts. However, managing the details of a merchant account is a different animal altogether—especially for multi-location merchants, or those with very high transaction volumes. The merchant must make sure transactions coming in are in balance at all times across the point of sale, processor and bank. Reconciling across your payment capture systems is the key to saving your organization time and money. The challenge is having the people and processes in place to do this in a timely manner—a major issue for most enterprises.
Even enterprises that already use a form of reconciliation automation with existing finance tools are using applications that are not designed to reconcile across the unique points mentioned above.
We all know that there are several pieces to the card processing chain. Once the funding process occurs—when your processor deposits money into your bank account to compensate you for transactions processed—making sure everything is in balance across both your transaction volume and your multi-locations can be daunting. This is why this kind of reconciliation is only usually done monthly, not daily.
Each payment capture element in the chain sends out an account activity statement or file periodically. There are two big problems with those account statements:
1. Since none of those entities are related to each other, there’s no standard for how, or when, those statements appear. Some might come via email, or you may have to log in to a portal.
2. The process of tracking transactions through the process is, at best, incredibly time consuming. At worst, it’s near impossible.
These two problems make it very difficult to understand adjustments, processing costs, and whether your merchant accounts are actually in balance at all. The issues are compounded for merchants with multiple locations, a high number of transactions to manage.
An accounting staff could easily be overwhelmed at the prospect of establishing an in-house reconciliation system across all their payment acceptance channels. Even after a system for collecting and compiling the data is in place, there’s still the matter of analyzing the data to understand effective rates, downgrades and other costs. It costs time, hours, people and money to manage all of this successfully.
Cost Analysis of Payments
Analyzing your payments cost demands staff hours and expertise in order to understand where costs can be reduced—such as downgrades, disputes and processor fees. Chances are you’re not doing what’s necessary to see these cost savings and put them in place for your business.
The first step to lowering your downgrade expenses is to determine exactly how many credit card transactions are being downgraded each month. However, your merchant statement isn’t going to give you the right amount of information to know those answers. Finding the time to do this analysis when there are other corporate priorities and responsibilities is also problematic. This is also true for dispute analysis and processor fee analysis.
Having the people in place to report and analyze processor fees is not an expense to which most organizations can commit. Therefore, that information gets lost in the shuffle. For example, let’s assume you have a contract with your processor for a set amount plus interchange ($.03 + Interchange Rate). That rate is not supposed to change, but any time a fee or rate is outside of that contracted amount, how would you know? Is the current staff in place today able to provide this information?
Having an automated system in place makes that information available without adding workload within the treasury group, cash management office, or whatever department handles these issues.
Make it Easy—Make it Digital
The best way to deal with the payment management process problem is to install a system that does the hard work more accurately, faster, and automatically—saving time, staff and expertise. Such a system exists: Red Carpet Software’s Merchant Dashboard.
Red Carpet Software gives the merchant the ability to reconcile between the three main points: Point of Sale (POS) to Processor, Processor to Bank, and back again. This end-to-end reconciliation ability is extremely valuable even for businesses that have a reconciliation system already. The RCS application can reconcile these points while few other systems offer the same ability.
Red Carpet Software takes data from each acceptance system and places it into our proprietary reporting engine, showing the merchant what is in balance and out of balance for the day. It takes a merchant the same amount of time to reconcile for in balance and out of balance transactions. RCS saves time and automates reconciliation, allowing the merchant to focus only on the out of balance items, and use the research capabilities of the tool to find out why the location is out of balance quickly and effectively.
Maximize Your Margins
Red Carpet Software was built to transform payment expense for any business, in any industry. Red Carpet Software offers visibility into costly risks by retrieving your merchant transaction data on a daily basis. With this function automated, notification of issues happens quickly and persistently in near real-time. This brings problems that were once nearly opaque into view for everyone involved in the process.
Red Carpet Software provides the right solutions for any enterprise that simply looks at electronic payment acceptance as cost of doing business and gives them a tool to helps them take control of the expense across the pain points of disputes, downgrades, reconciliation, GL entry, processor fees, and reporting and data analytics.
Having an all-in-one solution like Red Carpet Software puts hours back in your month and dollars back in your accounts. It also gives you a way to deal with risks as they are presented.