Credit card transactions are a part of every business, and as digital technology and remote work become increasingly common, credit card use will only increase.
Companies use the credit card reconciliation process to verify that the transaction information they receive in credit card statements matches up with the information contained in their own general ledger.
What Are the Two Types of Credit Card Reconciliation?
Credit card transactions come in two forms. Customers may use a credit card to purchase goods and services from the business. The business may also make credit card payments to its suppliers and service providers.
Both types of transactions must be reconciled. Your business will approach each type of transaction differently.
Credit Card Statements
Purchases made by your company and employees who have access to a company credit card will be documented on a statement provided by the company that issues the card.
Credit card statement dates will not always coincide with the closing of your company’s financial periods. You will need to account for this in your reconciliation process.
Credit Card Merchant Services
Customer payments made to the company on a credit card will be documented by your merchant account service provider, which acts as a third-party intermediary between the customer, the transaction portal, and your bank account.
Why Is Credit Card Reconciliation Important?
Like all other forms of reconciliation, credit card reconciliation represents a vital function in your company’s accounting procedures. While the transaction process involving credit cards is largely digital, there is still room for error.
Reconciling credit card account and merchant account statements with your company’s own financial records ensures accuracy in your accounting process and helps detect fraud.
Discrepancies can occur on either side of the transaction. Employees of your company can misplace credit card receipts documenting their purchases. Banks, credit card companies, and their systems make mistakes, too. Cards can also be used fraudulently. Reconciliation is the process to guard against all these possibilities.
What Is the Process for Credit Card Reconciliation?
The reconciliation process for credit cards begins with a comparison of transactions noted on credit card or merchant provider statements with those recorded in your business’ chart of accounts.
The process usually begins after a credit card statement is received, or after the close of your financial period. Your accountants go through each card transaction on the statements and match it to transactions in your own business records.
When discrepancies are found, an investigation follows to determine the appropriate steps to take. This may include disputing transactions with the credit card processor or making journal entries to correct errors.
Other actions may be required depending on the nature of the discrepancy. Finally, all research performed, information found, and actions taken are stored for audit purposes.
How Does Credit Card Reconciliation Software Work?
All of the above can be time consuming, labor-intensive, and prone to human error. However, a software platform can make the process much less painful by automating the steps involved.
Credit card reconciliation software can improve the accuracy and retention of important details by importing data from your general ledger systems and from credit or merchant accounts. The software will also digitally perform the function of analyzing and comparing the details of each transaction, and identifying any discrepancies.
All of this saves valuable time for your accounting team, and improves the accuracy and efficiency of your credit card reconciliation process.
What Solutions Does BlackLine Offer for Credit Card Reconciliation?
BlackLine Transaction Matching offers a complete credit card reconciliation solution. The transaction matching engine can import data from almost any source, including all major ERP systems as well as credit card statements and merchant service providers.
The solution is specifically designed to handle high-volume reconciliation, and can match millions of transactions in minutes. It also contains configurable matching rules to handle the most complex matching scenarios.
When discrepancies are identified that require analysis, Transaction Matching integrates with BlackLine Account Reconciliations to ensure that investigation is performed in a timely manner. This routes the discrepancy to the proper account owner through automated workflows, including centralized dashboards that provide full visibility into the status of the reconciliation.
Customizable templates, checklists, and integrated storage for supporting documentation ensure that the reconciliation process is thorough and standardized across the organization.
When correcting journal entries are required to address a discrepancy, BlackLine Journal Entry automates this portion of the process as well.
Learn more about the Accounting Process Automation solution that improves the speed, accuracy, and reliability of your credit card reconciliation process.