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Why Payments & Accounting Need to Play Nice in the Digital Era

October 6, 2021

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What is the advantage of streamlining payments and accounting? We look at how integrated reconciliation can future-proof merchant businesses.

The growing customer demand for an omnichannel experience has put enormous pressure on merchants to update their systems and processes. Research has shown that the global digital payments market size is predicted to grow to $236.10 Billion by 2028 — recently valued at $58.3 Billion in 2020, the growth period from 2021 to 2028 will be propelled by a compound annual growth rate (CAGR) of 19.4%.

Generation Z, the generation that currently makes up 40% of US consumers, is set to heavily influence the future of payments. Since they grew up with Apple products, high-speed internet, and smartphones, their expectation of a seamless, and instantaneous, digital experience is second-to-none.

According to Accenture, bilateral payments networks and delivering a “unified mobile payments experience” have also become “ground zero” as merchant businesses vie for customers.

Navigating Manual Accounting

This trend of quick, convenient digital payments has naturally resulted in a wave of payment technologies that do not integrate well with legacy and manual accounting and data entry systems.

Sixty-three percent of businesses still use Microsoft Excel as an essential tool for accounting. Not only are manual accounting and data entry often incompatible with newer technologies and platforms, but they are also more highly prone to human error.

In an era where instantaneous payment processing is expected — tracking and identifying potential errors have grown almost beyond human ability.

According to UK research organization FSN, more than 50% of CFOs and senior finance professionals spend too much time checking numbers manually every time changes are made.

As per the BlackLine survey, manual data entry and human error are considered to be the primary factors in making accounting mistakes.

Other common problems with a manual accounting and data entry system include:

  • Saving company financial or tax information on a personal device
  • Accidentally deleting customized formulas for calculating financial data
  • Using figures that were not calculated within the enterprise program

Manual accounting and data entry systems are struggling to keep pace with newer technologies and support increasingly digital customer needs.

A Streamlined Solution

Existing and emerging digital payments methods require innovative reconciliation systems that can integrate with new technologies and automate repetitive tasks.

The sheer number of shopping experiences available to consumers has merchants scrambling to work with as many platforms and payment networks as possible. But each network has its own protocols and settlement times — requiring a system that can easily match transactions and track settlements effectively.

Streamlined reconciliation solutions encompass both payments processing and accounting to ensure complete visibility along the transaction lifecycle. From sale initiation, settlement, dispute processing to final funding and report, the ideal system will provide maximum efficiency from end to end.

Integration Possibilities

The core of a streamlined reconciliation solution that promotes visibility is an ability to integrate with multiple payment methods and gateways. Inaccurate reconciliation is often a result of systems that are incompatible and cannot process the variety of data formats, layouts, and source types that come with them.

An integrated solution for reconciliation ensures that merchants are able to deliver on the omnichannel experience that’s vital for today’s consumers. The ideal system should fit easily into the business’s existing tech stacks and be customizable to suit individual merchant needs.

Future-Forward Automation

Automating reconciliation cuts out time-intensive, error-prone, repetitive tasks such as invoice capturing and tracking, data entry, and reporting. This helps minimize internal mismanagement and write-offs and plug revenue leakage. An automated reconciliation system can also take advantage of emerging technologies like artificial intelligence (AI) to reduce human error, allowing for faster, more accurate resolution and reporting.

AI can also add to the quality of the customer experience through:

  • 24/7 availability and service for efficient dispute resolution
  • Increased insights from data and analytics that can be applied to personalized features for customers
  • Close monitoring, alerts, and active tracking of potential issues and exceptions

Embracing digital transformation is no longer an option for businesses that want to stay ahead of the curve. As the customer base grows ever more demanding and tech-savvy, merchants’ need to maintain an omnichannel experience in the front-office will rely heavily on their operations capabilities.

Shifting to an integrated reconciliations system will allow them to reduce the risks of legacy accounting while pivoting to support the future of payments.

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