The high demand for digital goods and services puts an increased burden on retailers, as they need to process transactions from multiple service providers. From buying prepaid electricity and mobile data to paying bills and purchasing digital vouchers, South African shoppers expect more from retailers than physical products. This is why, if you don’t have a tool that automates your reconciliation, it’s going to cost you money.

Reconciliation is among the most crucial processes for any well-run business. Using a good reconciliation tool gives retailers complete, accurate, and validated views of the VAS transactions that they process. This way, retailers have accurate data for reporting and reaching settlement terms with the VAS providers and aggregators they’re contracted to. 

The transaction flow begins when customers purchase VAS at your point-of-sale (POS). By using dual-messaging POS devices, retailers can be assured of having a shared view of transactions with their chosen VAS providers - making it easier to match them at the end of a reconciliation cycle.

Automation helps with reconciling high volumes of transactions

There are two main types of data reconciliation: system reconciliation and financial reconciliation. 

System reconciliation takes on a holistic view of transactions, including things like cancellations and reversals, and can be automated.  ‍

Financial reconciliation, on the other hand, focuses more on keeping track of successful transactions, and relies on manual action. 

Some businesses combine all their transaction data into a single financial reconciliation process - at times, only looking at overall volumes and values - which can turn it into an onerous and sometimes confusing exercise. With large volumes of seemingly inconsistent data pulling through, this approach can be both time consuming and prone to human error. 

For accurate and efficient reconciliation to take place, financial reconciliation shouldn’t happen in isolation. It should happen hand-in-hand with system reconciliation, which brings automation into play. This gives you a more comprehensive view of your transactions and their details, but with a simplified approach.

How does this combination work?

A system reconciliation tool uses rule matching to compare your reconciliation files with reconciliation files from your VAS providers. The matching rules help with automatically sorting the transactions into matched transactions, unmatched transactions, and exceptions. This helps to confirm which transactions can be reconciled upfront.

• Straight-through-processing increases the number of matched transactions identified, meaning minimal manual intervention will be required. 

• Unmatched transactions can sometimes be resolved automatically in the next reconciliation period, should the corresponding record be uploaded in that batch. But if the transactions aren’t resolved, they may need some manual intervention.

• If your mark-up file and your provider’s mark-off file have different views of a transaction, it counts as an exception, meaning your financial operations team will need to examine and resolve it manually. Let’s say a provider’s system goes offline while a customer is buying an airtime voucher at a retailer POS. The customer has already paid for and received the airtime voucher. Your reconciliation data may show this as a successful transaction, while the provider’s data shows it as a failed one. This would be flagged as an exception, which would be resolved manually, following a conversation between your finance team and the VAS provider’s finance team.

Once the system reconciliation is complete, financial reconciliation can begin, as the bulk of the reconciliation period’s transactions are already matched or resolved. At this point, the process involves comparing overall values and reaching a shared understanding with your providers about the required settlement actions.

Having access to system reconciliation software, like Electrum’s Back Office tool, helps retailers to resolve transactions as close to the original transaction source as possible. This minimises the number of manual comparisons the financial operations team will need to address, ensuring:

• More accuracy from the outset, due to dual-messaging and automatic matching.

• Confidence in the data comparison, because the transaction matching is done through software from an independent party.

• A common source of truth, as moving through this process can help you stay on the same page as your VAS providers when it comes to transactions and settlements.

• An opportunity to save time through automation and increased accuracy, both of which save your business money.

At Electrum, we bundle our Back Office tool together with our Digital Goods and Services Platform, giving retailers everything they need to easily facilitate and keep track of all transactions.

Contact us to chat about how Electrum’s Back Office tool can help your finance team to develop a more efficient reconciliation process.