But first,

What in merlin’s beard is Account Reconciliation?

But first,

To understand this, let’s take a look at a very basic and everyday process for most companies.

For most online businesses, transactions are made online and processed by a Payment Gateway.

The Books

The information about invoices sent to your customers.

The Gateway

The details of the transactions from the payment gateway.

The Bank

The credit statementfrom your bankaccount.

But here’s the catch. The customer’s invoice information at the books look like this:

Invoices/TransactionsCustomer 1 - Invoice 001 - $99 - Paid on 2nd Jan

Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan

Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan

Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan

Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan

But here’s the catch. The customer’s invoice information at the books look like this:

Total = $495

And the statement from the bank looks like this:

And the statement from the bank looks like this:

Bank Transactions

Sum of $490 credited to the account on 4th Jan

And the statement from the bank looks like this:

Bank Transactions

Sum of $490 credited to the account on 4th Jan

$495 $490

Unreconciled data:

This happens since the gateway transfers the amounts

in bulk to your bank account at the end of the day or after a few days.

Also, the Bank Transaction Statement doesn’t contain key information like:

The details of customers who have successfully made the payment

The transactions that are still in the process

Gateway processing fees

Hence it's necessary for a method to reconcile the information gap between the Books, and the Bank, with the information from the Gateway Statement.

As we speak, accountants are spending

hours upon hours of their time doing this process of Reconciliation manually.

They are desperately muddling through huge amounts of data from various sources (Billing System, Gateway Statement, Bank Statement) in an effort to reconcile payments.

Here’s how Chargebee has solved the problem for you.

We aggregate all the necessary information in one place for easy comparison and reconciliation.

We do this by introducing a Gateway Bank Account into your accounting (Xero/QuickBooks) software.

We do this by introducing a Gateway Bank Account into your accounting (Xero/QuickBooks) software.

Here’s an overall flowchart of how we do it.

Xero/QuickBooks (The Books)

Reconciliation inside Xero

Review and click on OK

Now, find the most probable matches without digging into oceans of transactional details.

Before Reconciliation

Invoices/Transactions

Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan

Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan

Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan

Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan

Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan

Bank Transactions

Sum of $490 credited to the account on 4th Jan

Total = $495

Invoices/Transactions

Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan

Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan

Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan

Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan

Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan

Bank Transactions

Sum of $490 credited to the account on 4th Jan

Total = $495

Unreconciled data!

After Reconciliation

Invoices/Transactions

Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan

Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan

Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan

Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan

Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan

Gateway Statement

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Processing Fee - $5.00

Transfer $490 to Bank account on 4th Jan

Bank Transactions

Sum of $490 credited to the account on 4th Jan

Invoices/Transactions

Customer 1 - Invoice 001 - $99 - Paid on 2nd Jan

Customer 2 - Invoice 002 - $99 - Paid on 2nd Jan

Customer 3 - Invoice 003 - $99 - Paid on 2nd Jan

Customer 4 - Invoice 004 - $99 - Paid on 2nd Jan

Customer 5 - Invoice 003 - $99 - Paid on 2nd Jan

Gateway Statement

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Transaction processed, for $99

Processing Fee - $5.00

Transfer $490 to Bank account on 4th Jan

Bank Transactions

Sum of $490 credited to the account on 4th Jan

Thus, Chargebee helps you with Reconciliation of payments and clears the information gap between the Books and the Bank.

Happy?

Happy?

Wait, there’s more!

You can now use Chargebee’s Google Chrome Plugin to automate the Reconciliation process, no more clicking a 1000 ‘OKs’.

You can now use Chargebee’s Google Chrome Plugin to automate the Reconciliation process, no more clicking a 1000 ‘OKs’.

Now, reconcile with just a click of a button!

Ta da! You just saved yourself 5 work hours every week, with efficient Reconciliation methodology in place.

Ta da! You just saved yourself 5 work hours every week, with efficient Reconciliation methodology in place.

A small back of the envelope calculation of the possible amount saved (depends on the size of the business):5 hours * 30 dollars per hour = 1500 dollars per week

To read more about Xero Reconciliation in Chargebee, go to:

https://www.chargebee.com/docs/xero-reconciliation.html

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