When it comes to retail businesses, managing the inventory is an extensive task. However, this is not the toughest task as managing the financial records of the business is what demands maximum efforts and one of the best ways to achieve this feat is by getting the POS(Point-of-sale) Reconciliation into play.
Through reconciliation accounting, one is able to dig deeper into the finances of a company through transaction analysis. In other words, it is comparing of the two financial records, one of the company’s and other of the bank or credit card issuer, to see whether the amount going out of the account matches the amount which is used as an expense. Improved accuracy and consistency along with the following benefits are assured with POS Reconciliation.
Top 5 POS Reconciliation Benefits
1. Zero Error in Accounting
Even the professional accountants make mistakes and when the business grows by leaps and bounds, the bank account activities also scale. This may lead to overlooking a few transactions but with POS Reconciliation, you are able to get hold of any accounting errors that might create trouble for you in the future.
2. Assures Secure Business Deposits
Direct debit payments are a normal business routine but the problem persists when the cash available in the account is not sufficient to meet such a transaction. This not only makes you a defaulter in the eyes of the bank but lowers your business image in the eyes of the suppliers too, which is never the case with a regular POS Reconciliation conduct.
3. Convenient Bill Payments
Paying the bills on time is essential but there can be times when you miss out on a few payments. Automation of bills for a set schedule for account debit is surely a solution but it will only work when you have enough cash in place for it. This information gets available only through reconciliation.
4. Saves Money
Late payment fees are a normal thing for businesses who do not wish to hire an accountant. The reason being they do not have the time to focus on everything and this is the reason regular POS Reconciliation done by a hired accountant saves you from all those additional late fee expenses.
5. Identifies Unsanctioned Transactions
You may be surprised to know that the costs of employee theft go up to $50 million a year. The reason behind this is nothing but the fact that some business owners take their financial accounts lightly. Through reconciliation, you are able to notice every kind of exploitation happening within your financial retail accountancy.
5 Step-by-Step Procedure for POS Reconciliation
1. Statements and Internal Records Comparison
Gather everything you need for this and pay full attention while comparing the transactions between internal account copies and bank statements. Mark the ones which you are able to verify.
2. Make a Record of Transactions with No Cross-Reference
It is important to note payments and bank deposits for which you can hardly find any evidence. From overdraft fees to uncleared checks, automated payments, ATM charges, it can be anything. Likewise, check the copy of your internal records and make a note of the payments that do not match with the bank statements. Deduct their total from the bank statements’ total balance.
3. Incoming Funds Verification
Check for deposits and credits in the copy of your internal records for bank statement cross-reference. Make sure to add the ones which are awaiting bank confirmation to statement balance. Some deposits might be displayed in the bank statements that do not appear in your records. In such a situation, adding the entries to keep your records updated is a wise thing to do.
4. Report Doubtful Errors to the Bank
In most of the cases, it is the business owners who commit mistakes while maintaining the records. However, there are times when the bank makes such mistakes and you should definitely contact them in case you are not able to understand the anomalies in your internal rerecord. They will rectify the problem by adding or subtracting the amount required.
5. Maintain Balance Records
POS Reconciliation will help you in aligning the bank statements and internal records. This way you will be able to record any kind of difference between your account and records and make a not of the same. When you will be conducting the next POS Reconciliation, these notes will prove to be highly beneficial for you!
Some Additional Tips
There are times when transactions take some days for processing and might not show in the monthly statement, so just stay calm.
You should consider the interest that might be eligible for application in case you have started POS Reconciliation some weeks post the date of your statements.
It is important to move with the technology and adoption of the latest software will help you in keeping a track of your finances much better during the accounting for retail business.
Getting integrated systems into place will save time and make the reconciliation free of any human errors as the payments and POS integration will ensure a smooth flow of payments from point-of-sale into the payment processor.
The Best POS Reconciliation Time
It is highly recommended to perform the POS Reconciliation once a month since most of the financial institutions offer monthly statements. This will help you in keeping your records intact on a monthly basis and reduce the efforts and time needed to reconcile statements of many months. However, if a lot of activities take place in your retail business, you may consider reconciling every day. This will definitely lessen your burden along with making your grip stronger with zero fraud error potential.
Avoidance of Financial Problems through Accounts Monitoring
There always comes a time in the business life-cycle when a business starts growing at a steady pace and so does its operations, especially the financial ones. Committing a mistake is in human nature but this can greatly be minimized and brought down to zero with the help of POS Reconciliation. This monitoring of accounts during retail accounting not only saves you from the future financial problems but also provides you a platform wherein you can understand and utilize your finances in order to grow your business.