Why do financial reconciliation in retail?
Organizing your business accounts is essential to maintain good control of resource inflows. Therefore, carrying out financial reconciliation in retail represents a central step in monitoring the corporation’s performance. As there is great dynamism in this sector, that is, a large flow of entries and exits , it is worth taking even more care regarding its management.
In this regard, bank reconciliation works as one of the most practical means of checking sales and receipt of the cash amount. With the emergence of different payment methods, it is vital to have several financial control resources.
If you want to know more about this procedure and understand how it can be applied to your business, continue reading and check out our tips.
What is financial reconciliation?
Any flow related to a sale involves some steps until the payment reaches the entrepreneur’s account. From authorization to information processing, there is a certain amount of time for the value transfer to be registered and paid.
To bring organization to such processes, financial reconciliation is responsible for comparing internal records with external transactions in order to record errors, operational failures and any inconsistency between the observed financial flows.
This means that the more manual and staff-dependent your records process is, the greater the likelihood of errors being made . This situation produces a chain effect, in which, due to lack of data integration, there are failures that overlap and result in the need for rework.
How does financial reconciliation work?
Financial reconciliation is an easy procedure to carry out in the establishment, however, it is necessary to be careful to avoid errors and, if possible, have solutions that automate such processes. This is because it works as a check on the movements that were carried out in your business.
For example, using the account statement, it is possible to check what inflows and outflows occurred. This way, you understand what movements occurred and can analyze whether there was any flow that was supposed to appear, but was not carried out.
It is advisable to carry out this procedure daily with the intention of identifying possible chargebacks or missed payments . This way, you gain several advantages and more control over business processes.
What are the reasons for carrying out financial reconciliation in retail?
Now that you understand what financial reconciliation is and how it works, it’s time to discover how it can help in retail. To do this, we have separated the main reasons why you should carry out this procedure in your business. The following content is worth checking out.
Improves control over sales
Errors in sales values can generate losses for the business, customer dissatisfaction and difficulties in financial management. For example, suppose you made a sale, but when entering the amount, you made a comma mistake and charged the consumer more.
When carrying out financial reconciliation, it is possible to identify this mistake and make the necessary corrections. This helps to keep the customer satisfied and improve your results.
Therefore, to have more control over the business’s sales processes and understand what comes in and what goes out, it is worth investing in financial reconciliation. Furthermore, using technological solutions helps to avoid errors that harm the business.
Help with setting deadlines
Good control of payment deadlines is essential to maintain good working capital in your business and avoid paying interest and fines. In this sense, financial reconciliation is important to assist in the necessary adjustments in order to match the receipt and payment dates.
Furthermore, know how to negotiate with suppliers and offer incentives to consumers so that you don’t have to worry about honoring commitments. Another point is that, through reconciliation, you reduce forgetting about the bills you have to pay. This way, you stop paying unnecessary fines and interest and can reinvest this amount to increase business profits.
There is also the possibility of using technological solutions, such as software, to be able to carry out the entire reconciliation more effectively and reduce errors due to lack of attention.
Provides more financial security
One of the main factors that hinder the smooth running of a business is a lack of financial health. For example, not carrying out financial reconciliation can generate losses due to third-party errors, which hinder the long-term sustainability of the business.
Furthermore, through it, it is possible to identify some of the bottlenecks in the business. For example, imagine that you pay a lot in bank fees. When reconciling, it is plausible to identify this factor and negotiate with the financial institution that manages your account.
Improves monitoring
Understanding how the business’s finances are doing is essential to defining strategies that minimize costs and maximize profitability. In this sense, financial reconciliation is a great ally.
Because it makes daily releases, it becomes possible to understand how your business is progressing in real time. This way, you can identify when there are problems and, consequently, have more time to make decisions to correct these issues.
How to carry out financial reconciliation efficiently?
One of the best ways to organize your accounts is through the support of technology. Having applications and platforms that were developed exclusively for retail businesses allows you to centralize data, monitor the temporal evolution of your sales and gain even more intelligence in the decision-making process.
Therefore, it is worth looking for solutions in terms of automation for financial reconciliation. This way, it is possible to avoid errors in records and use information that is capable of indicating the real situation of the business.
