Feb 27, 2023
4 min read

Expert Guide to Corporate Card Reconciliation (+Video)

Two CFOs discussing What Are The Best Ways To Reconcile Card Payments, and how Payhawk's spend management solution ties into the equation.
Quick summary

In this blog, we delve into the complexities of card reconciliation and its vital role in finance management. Uncover common challenges, such as high transaction volumes and errors, and learn how Payhawk's innovative solutions offer real-time, error-free reconciliations. Don't miss this insightful guide filled with expert advice on streamlining your financial processes.

Table of Contents

    Corporate card reconciliation 101: A quick guide

    What is card reconciliation?
    Card reconciliation is a critical financial process where transactions on credit/debit cards are matched with statements to ensure accuracy. It's key for detecting errors and preventing business expense fraud.

    Why it matters
    Accurate reconciliation ensures every transaction is legitimate, vital for transparent financial reporting and compliance.

    The process
    It involves collecting statements, matching them with ledger records, identifying discrepancies, and resolving them.

    The role of technology
    Modern real-time reconciliation tools automate and streamline this process, reducing errors and increasing efficiency.

    The importance of card reconciliation (and how you can save money on the process)

    Proper card reconciliation is essential for businesses. The finance team must compare credit or debit card transactions with the corresponding receipts and invoices to confirm the spend is in line with your corporate card policy, prevent fraud, and pinpoint any missing information.

    Finance teams carry out corporate credit card reconciliation very regularly, often daily, weekly, or monthly. Whatever the cadence, businesses can agree that the process is manual and time-consuming without the right technology. Therefore, automating your reconciliation processes can save you tons of time (and money in labor hours) if you opt-in for an effective reconciliation solution.

    Six biggest reconciliation challenges (as told by our clients)

    Businesses may face several hurdles when reconciling their financial records. Being notorious for taking forever to complete, this process always causes a plenty of headaches for finance teams. Here are some of the biggest challenges finance controllers shared with us:

    1. Volume of transactions: If a business has a high volume of transactions, it can be time-consuming to reconcile them all. This can lead to errors or inconsistencies in the records if not properly managed.
    2. Discrepancies or errors: Identifying discrepancies or mistakes can be challenging, especially if there are multiple sources of data or if the records aren't kept up-to-date.
    3. Human error: Mistakes can happen during reconciliation, especially if your team completes it manually. This manual process can lead to inaccurate records or errors that are difficult to detect.
    4. Timing: Identifying and correcting errors or discrepancies will be difficult if you don't complete the reconciliation process on time. The delays can lead to late financial reporting or inaccurate financial statements.
    5. Lack of resources: If a business doesn't have the necessary resources, such as staff or technology, it can be challenging to keep up with the volume of transactions and ensure accuracy.
    6. Complex transactions: Some transactions can be complicated, involving multiple parties or currencies, which can make reconciliation more challenging and time-consuming.

    Businesses often introduce technology to help streamline the reconciliation process and reduce errors. These introductions may include tech like using automated reconciliation software, spend management solutions, and accounting software or ERPs.

    Curious to see how automated reconciliation software can help you solve most of these problems? Watch the video below:

    Corporate card reconciliation processes step-by-step

    Business card reconciliation stands out as a critical yet challenging task. Ensuring every transaction aligns perfectly with bank statements and ledgers can be like finding your way through a financial maze, with a blindfold on, in the rain.

    For those finance teams running reconciliations manually, these are the main step:

    1. Gathering Statements and Records

    Start by collecting all your employees' credit/debit card statements and corresponding transaction records. All this paperwork would be the foundation of reconciliation.

    2. Matching transactions

    Match each entry on the card statement with its corresponding record in the accounting ledger (you can ask your finance team for help). This step is crucial to ensure the accuracy of your financial records (but can take days in bigger companies if done manually).

    3. Identifying discrepancies

    Look out for any mismatches or anomalies between the statements and ledger entries. These discrepancies could point to errors or unusual activities that need further investigation.

    4. Investigating and resolving issues

    For each identified discrepancy, conduct a detailed investigation to ascertain the cause and take appropriate corrective actions. Very often employees can make mistakes when claiming reimbursements, and rarely - this could be the case of business expense fraud.

    5. Recording adjustments

    After resolving any discrepancies between your statements and the ledget, make the necessary adjustments in the accounting records to reflect the true nature of each transaction.

    6. Balance verification

    After you make all the necessary adjustments, your books should be ready. Verify that the adjusted records align with bank statements and the general ledger. This step will confirm the accuracy and integrity of the reconciliation process.

    7. Documenting the process

    Document every step of your reconciliation process, including discrepancies noted, adjustments made, and final verification results. At Payhawk, our solution can automate this entire process, ensuring a seamless and transparent record-keeping mechanism.

    8. Final review and approval

    Conduct a comprehensive review of the reconciled statements and records. Ensure everything tallies and is accurate before giving your final approval.

    9. Establish and communicate a regular reconciliation schedule

    Establish and maintain a regular schedule for reconciliation, be it daily, weekly, or monthly, to keep your financial records up-to-date and accurate. Make sure that all company stakeholders are aware of all the deadlines for submission of their statements.

    Done manually, reconciliation can take days. Our automated reconciliation tool comes into play here, significantly reducing manual efforts and errors and bringing efficiency to the entire process. Learn how ATU reduced time spent on reconciliation from days to hours below:

    MDM Props saves $1000s with expense categorization and reconciliation

    Automated reconciliation from Payhawk: Success Stories

    Our innovative reconciliation tool has transformed the financial management landscape for many businesses. Here are some compelling case studies that highlight the time and efficiency-saving benefits of our tool, brought to life through our clients' experiences.

    How MDM Props saved thousands on manual reconciliation with Payhawk

    Uchenna, the Finance Manager at MDM Props Ltd highlighted the biggest pain most finance controllers have to deal with during the reconciliation process:

    We used 2 different credit card systems, one from Barclays and one from AMEX... it would take days or even weeks to reconcile. Before switching to Payhawk spend management solution? We mainly did everything manually, which involved a lot of saving and chasing paper receipts. Then, we briefly used Pleo, but it wasn't sophisticated enough for our needs.

    By moving to us, MDM Props completely streamlined their reconciliation process, transforming a tedious, time-consuming task into a swift, efficient process, thereby improving cash flow management and operational efficiency.

    Closing the month swiftly with Payhawk at Essentia Analytics

    The small finance team at Essentia Analytics used to spend a lot of time running manual finance processes. Since switching to us, one of their financial controllers has managed to save so much time that she's been able to reshape her role.

    Carolina Einarsson, the Finance Director at Essentia Analytics, shared:

    Saving time with Payhawk is a game changer. We close the month twice as fast and we've even been able to allocate resources to revenue-impacting teams. We now have a finance employee who spends 50% of her time supporting as an SDR.

    Replacing receipt-chasing with what matters at Nobel Recruitment

    Our customer Nobel Recruitment told us their tale of streamlining processes too. Liz Slot, Head of Finance & Operations mentioned:

    Whenever it came to month-end, I would always have to spend time loads of time chasing managers for missing receipts!

    Here, Liz touches on real headache for finance teams — chasing down receipts. By automating this process with us, the Nobel teams have saved time and streamlined the entire financial closing process, enhancing efficiency across the board.

    These stories showcase how our customers revolutionize financial processes with our solution, turning time-consuming tasks into efficient, streamlined operations that save time and allow businesses to focus on growth and revenue-generating activities.

    Getting fast, accurate reconciliations with Payhawk

    At Payhawk, we can help you achieve error-free, real-time reconciliations.

    The biggest benefits include:

    • VAT reclaims (with fewer missing receipts - important if you have global entities in Europe
    • No more time-consuming manual entry and data matching
    • Zero errors thanks to data capture
    • And no time wasted on chasing receipts

    Ready to see how Payhawk can revolutionize reconciliations at your business? Book a demo today.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager
    LinkedIn

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →
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