How improved reconciliation with virtual cards can boost your bottom line 

Reconciliation challenges are felt directly by your back-office employees, but they also have an indirect impact on your company’s bottom line, forecasting capabilities, and cash flow. Efficient and effective reconciliation can free up your employees to focus on other needs, reduce fraud, and boost customer satisfaction. 

Fortunately, virtual cards are a smart way to pay and can improve reconciliation. Keep reading to learn more about what good reconciliation looks like and how virtual cards can help. 

What is reconciliation?

Payment reconciliation is the process of verifying financial transactions to align expected payments with actual ones. From an accounts payable or accounting perspective, that means comparing financial statements from a bank or your ledgers with invoices and receipts from payments processed. This is done to ensure accuracy, maintain compliance, and catch potential fraud, among other reasons. 

Reporting reconciliation often comes in a variety of formats, including daily, weekly, and monthly reports, as well as real-time access through APIs, enabling clients to seamlessly integrate data into their accounting systems.

Who is responsible for reconciliation? 

A variety of back-office roles could be responsible for reconciling payments at a company, including: 

• Accounts payable professionals
• Accounting staff
• Controllers
• Treasury staff

What should reconciliation look like? 

With reconciliation, it’s often how it works and how it should work at your company. When reconciliation is working well: 

• It’s one-by-one rather than in bulk, so it’s more scalable for a large volume of payments.
• It’s automated and integrated with other systems.
• It’s electronic and collects transaction data upfront.
• Payment statuses are easy to see.
• There are fewer issues requiring extra attention by your staff.
• There’s less fraud impact because issues are caught more quickly.

When you achieve the above, you’ll save time and have a clearer picture of cash flow. 

When you don’t achieve the above, reconciliation means your accounts payable team, accounting staff, etc., are spending time reconciling paper invoices, or are unclear whether a payment has been accepted in real-time, or are trying to match hundreds of purchases to a single invoice. 

Imagine that you’re an auto warranty insurance provider. Your customers depend on you when something goes wrong with their car to potentially facilitate payment with a towing company and an auto repair shop. Any delays in issuing payment can delay service, which creates customer dissatisfaction and hurts your business. You don’t want to be in a situation where your back-office staff is preparing paper invoices, trying to reconcile multiple purchases to the same invoice, or is unable to communicate to a customer when service is authorized as quickly as possible. 

How do virtual cards improve reconciliation? 

Virtual cards stack up well against other payment methods. Virtual card programs can be set up to allow for virtual cards to be issued automatically to suppliers to cover individual purchases, which also prevents the need to bulk reconcile multiple purchases to a single invoice, as opposed to using a shared credit card. 

Virtual card purchases are also more transparent. For example, with WEX, there are built-in APIs that allow for real-time notification so you’ll know immediately when purchases are made. In the auto warranty example, you could tell the driver that the tow truck is on its way as soon as you receive the notification of payment being accepted. That’s an experience you won’t have with checks and other traditional forms of payment. 

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers.