Running an eCommerce store is an exciting business. You are able to sell your products to customers all over the world. The downside is that you have to deal with handling all of the money. You have to track all of the payments coming in, and this is the importance of Payment Reconciliation.
In this blog, we will define payment reconciliation, why it is necessary, and how to automate payment reconciliation in your eCommerce store. We will keep it easy, so easy that we will explain it as if you were a 10-year-old. So let's get into it!
Just imagine: You sold a toy from your website for $10. Your customer paid through a payment gateway like PayPal or Stripe. Money was then transferred to your bank account. But how do you know the correct amount of money reached you? If a small amount was taken in fees, do you know? What if a customer accidentally double-paid for their first order?
Payment Reconciliation is the process of verifying your sales records to the actual payments you received from your bank, payment processor, or other payment provider. You have to reach a stage where nothing does not match. If something does not match, you need to correct it.
Why Payment Reconciliation is Important. Money matters always. Money and the way we handle it matter. Let's say you've sold 100 items in the last 30 days and you think you've made $1,000. But your bank account only shows you've deposited $920. Where is the other $80? It could be a fee, a return, or possibly a payment you never received. If you don't take the time to reconcile payments, you risk losing actual income, and we don't want that!
Here is why Payment Reconciliation is so important:
Even if you are running and managing your e-commerce store using Shopify, WooCommerce, or any other platform, if you are not reconciling your payments, mistakes and inconsistencies can still happen. Good business practices never go out of style, so don't skip over Payment Reconciliation!
There are two methods for reconciling payments:
This entails handling everything on your own. After downloading your sales report, you proceed to get your bank statement. You make line-by-line comparisons.
Sounds like hard work? That’s because it is. Manual Payment Reconciliation:
When we refer to automation, we mean software tools that do the comparing for you. These tools read your sales data and payment data; compare them all; and put in front of you what matches and what doesn't match. Pretty simple, fast, easy, and accurate.
Now let's get deeper into what is needed to automate it.
Although very sophisticated, you do not need to be a technical wizard ("whiz") to automate Payment Reconciliation; all you need to do is follow these steps:
First, ensure that your eCommerce platform integrates well with your payment and accounting tools. eCommerce platforms like:
Can support Payment Reconciliation through apps or plug-ins.
Select payment gateways that offer detailed reports and are straightforward to integrate with your accounting software. Some of the best examples of payment vendors include:
Be sure they can provide and send information to your accounting or reconciliation software.
Next, use accounting software that supports Payment Reconciliation. Some popular options:
These tools can sync with your sales and bank data to automate the matching process.
Once you've connected everything up and you're ready to go, create automated rules. They're simple settings that instruct the software:
This step is verifying that the software is doing the checking correctly.
Even with automation, you still need to review unmatched entries weekly. Maybe it's just a delayed payment, or perhaps a customer used another name. When you check early, you are able to fix things promptly.
Set a schedule for Payment Reconciliation:
You can use automation, but consistency will allow your money to stay clean.
There are many tools available that make Payment Reconciliation easy. Here are the premier:
Choose a tool that meets your business needs. Most offer free trials!
You may be thinking, “Why should I care about doing this?” Here’s why:
Checking via your bank reconciliation takes hours; automating takes seconds.
Humans make mistakes, but software does not (if you have it set up right).
If a payment is missing or if you are missing a payment, you will know right away.
You can be assured the records are tidy and ready when tax season arrives.
You’ll always be certain of your actual income, not just estimates.
That’s the benefit of smart Payment Reconciliation.
Sometimes things can go wrong, even with automation. Let’s look at a few examples:
Always pay attention, even if automation is doing it for you.
Suppose you operate a Shopify store. You sell shoes and accept payment through PayPal and Stripe. Each week, you log in to your accounting software, QuickBooks.
You've connected PayPal, Stripe, and Shopify to QuickBooks. It now knows your orders, payments, and refunds. The software matches payments to sales. If anything doesn't match, you get a notification.
You no longer spend hours doing this. You log in once a week, check any flagged items, and move on with your business. This is what automated Payment Reconciliation feels like!
If you have a team, it is a good idea to train them on how Payment Reconciliation works:
A trained team means fewer errors and solving problems quickly.
Let’s make your life easier! Here are the tips we have:
Want to make it easier for your business to handle eCommerce payments? With advanced integrations and customized solutions made just for your store, DecodeUp will help you automate this process. We help you eliminate the use of buttons that aren't needed when it comes to linking and integrating your payment gateways, reconciling in real-time, and avoiding mistakes in reconciliation. This saves you hours that you used to spend reconciling by hand. Connect with us so we can help you with your financial affairs and let you focus on your business!
Payment Reconciliation may sound difficult, but it doesn’t have to be. Using the right tools and doing some forethought at the outset can automate most of the work. You then have extra time to focus on growing your eCommerce store!
Let’s revisit the key takeaways:
There will always be an element of manual checking required, but automating your Payments Reconciliation work will create a "smarter", slicker, and more profitable online business.
CEO & Founder of DecodeUp, a tech agency helping brands scale in eCommerce and Fintech. With 12+ years of experience, he blends technical expertise with business insight to build user-focused platforms that drive growth, engagement, and lasting impact.
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