Don’t let manual processes slow down payment reconciliation

[fa icon="calendar'] July 20, 2017 / by Adam Singer

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Payment reconciliation might seem like a no-brainer to many retailers. After all, so many of today’s transactions are by card, right? Not necessarily. According to the Federal Reserve’s Diary of Consumer Payment Choice study, 32 percent of consumer spending is still in cash. In retail categories like food and personal care supplies, auto-related spending, entertainment, and personal services, cash still reigns supreme over credit, debit, checks and electronic payments.


When I visit stores, I see all the work that goes into reconciling cash and other non-electronic payments – both at the stores, and then later at corporate, as they wade through the manual reports. If you reconcile payments manually, you have probably had some of these struggles:

  • Not having one system of record. Payment reconciliation by way of gathering data from the POS, plugging totals into Excel spreadsheets and recording information on paper logs is inefficient and error-prone, taking time from value-added activities and inviting loss or even theft.
  • Lack of an electronic paper trail. I’ve frequently seen retailers with manual reconciliation processes who have 1,000-page binders filled with printed POS reports, hand-written safe counts, and deposit slips that aren’t stored electronically. Data spread out across multiple systems, devices and reports makes it nearly impossible to get actionable information and see issues that need attention in a timely manner.
  • Delayed reporting to corporate. Whether it’s two days or two weeks, a lag in store reconciliation data delays and disrupts your corporate reconciliation process, keeping you from reconciling stores and researching exceptions promptly.
  • A lot of guesswork. Tracking compliance and efficiency with data from several systems takes significant time for corporate employees, who often struggle to efficiently capture issues like which cash offices are in compliance, which cashiers/bookkeepers are having over/short issues, or how much cash stores keep on hand.

No matter what retail vertical you’re in, having an efficient way to reconcile your cash is important. Maybe you’re thinking, “But our stores hardly take any cash at all!” That might be true, but even if your cash sales are less than 10 percent, there are benefits to automating payment reconciliation:

  • Make sure that expected totals match the POS and that those totals are sent directly back to the POS or to your general ledger. I’ve been in dozens of stores, watching staff manually work with cash, including counting it, re-counting it, 10-keying amounts, and then recording and comparing totals. It takes time – a lot of time – to perform each step, and when the employee is interrupted to perform another task, it slows down the process even more.
  • Guard against errors. Speaking of interruptions, researchers at Michigan State University found that disruptions of only a few seconds caused participants to make twice as many mistakes as without interruptions. You know your stores are busy, so when payment reconciliation is broken up by requests for customer service, a cash loan to a lane, or a truck arriving with a shipment of stock, it’s easy to make errors.
  • Remove opportunities for theft. Unfortunately, sometimes employees steal. When data from manual cash counts is totaled and transferred to the POS or general ledger by hand, there are a lot of opportunities for someone to fudge the numbers. You’ll likely find out about it, but delayed reporting can allow it to continue and cost you more and more until you can put a stop to it.
  • Ensure consistency among stores. With any aspect of your operations, consistency is key. When stores develop their own methods for balancing or find a “quicker” way to count down the safe, they’re not following the procedures you’ve designed, leading to inefficiency and compliance issues. Multiply those exceptions across all your stores, and you’ve got a big problem.
  • Get the information you need faster so you can take action. When payment reconciliation is automated, the data from that process is available in real time to you at corporate, as well as leadership in your stores. You’ll have information you can trust and use to govern your currency operations – because you know it’s automated and accurate.
  • Make employees happy. The store employees I’ve worked with are always thrilled to have automated processes replace clunky, repetitive manual tasks because they can be more efficient, have less stress and spend more time helping customers.
  • Embrace technology to increase efficiency. For many retailers I’ve visited, payment reconciliation uses antiquated technology and is extremely inefficient. The cash office is often forgotten when it comes to investing in new technology, because it’s not customer facing. It’s an eye-opening experience for retailers to see how efficient reconciliation can be with the introduction of new technology that automates many of the manual processes cash offices face on a daily basis.

Manual processes in currency management might seem like an area that works, so it doesn’t need change. After all, it’s the way you’ve always done things. But efficient, productive back-end processes benefit the front end of your business, including your customers, your employees and your bottom line. To remain competitive, focus on the customer is imperative. Implementing an efficient payment reconciliation process by bringing technology into the cash office ensures you stay ahead of your competition.

Adam Singer
Adam Singer

Adam Singer has studied a wide variety of retail cash offices while at Balance Innovations, where he serves as a product manager.