≡

What is payment reconciliation and why is it important?

Setting up an online store is quite easy. Platforms like Amazon, Flipkart, Meesho, Myntra, Shopify etc. have simplified the process to such an extent that it can now be done with the click of a button. While this might be the case, the actual selling involves day to day management with respect to inventory, distribution, fulfillment, marketing and payments. While each of these have their own set of challenges and a lot of creative solutions, this post will delve a bit deeper into payments and why every seller, irrespective of the size, should focus on reconciling payments.

What is payment reconciliation?

eCommerce platforms operate on a marketplace model, i.e., they do not own the inventory, however, they charge you for every unit that you sell via their platform. A typical process flow is something like this:

 Typical order and payment flow

Since there is a time difference between payment release and order delivery, every seller needs to ensure that they are being compensated for each unit being sold on the platform. This process of matching each order with payment receipts is payment reconciliation.

Why is payment reconciliation important?

Apart from the obvious reason, payment reconciliation also helps you get insights about your business, which can then unlock potential growth and cost saving opportunities. Lets take a look at some of the common reasons for reconciling payments.

  1. Ensure that the seller is getting paid of each order - The obvious reason :)
  2. Ensure fees charged are as per the rate card - Fee audits
  3. Ensure adequate compensation for damaged / lost units - Reimbursements and adjustments
  4. Better understand unit economics - Understanding P&L
  5. Take strategic decisions - Actionables and insights

Reconciling payment usually involves analysing tonnes of data, refering to multiple tables and an attention to detail that can only be matched by the precision of a master craftsman.

Reconzo helps sellers reconcile their payment data with the click of a button. Our dashboards are designed not just to provide you with a business overview, but also give actionable items for each insight. Book a demo with us see how we can help you unleash the potential of your business.