In this article, we’ll discuss the following topics:
- What are the benefits of using payment reconciliation software?
- What defines a good payment reconciliation solution?
- List of the 10 best payment reconciliation software providers
Payment reconciliation is a financial process whereby a company matches its owed internal payment records with bank statements, credit cards, or other financial institution transactions. The process is typically conducted manually for every transaction separately in each of the bank’s environments. For companies with an increasing number of payments, especially when they are working with multiple banks, it can become extremely time-consuming and error-prone to handle payment reconciliation manually, bank by bank. As a result, companies often start considering adopting payment reconciliation software to automate the reconciliation process.
What are the benefits of using payment reconciliation software?
Payment reconciliation software have many benefits that mainly affect the efficiency of your team. By working with our clients, we have found that they typically realize five main benefits while using an automated payment reconciliation solution:
With payment reconciliation software, you can fetch all payment records from different banks or other sources into one system. Matching payments with bank statements can then be done centrally without logging on to each of the bank’s services. Which is possible due to setting up bank connections with all the banks, so that the system can match items against the bank statements that are retrieved via the connections. By centralizing everything in one place, you can also start tracking all related cash flows, which are then available for analysis.
Software can automate the reconciliation process by setting up various rules to define how payments can be reconciled with transaction data from different sources. There are multiple rules to do this, such as balance matching, AR & AP matching, lockbox matching, e-commerce matching, and more. An automated and accurate reconciliation process also helps avoid extra work when looking into discrepancies, for example, for payments of specific invoices in several systems.
Since software helps automate reconciliation processes based on pre-set rules, it leaves less room for errors. A solution can also more easily catch discrepancies or fraudulent payments that deviate from statements. Some solutions can also screen posted payments against sanction lists, further securing the payments process. In addition, significant payment sums can often be verified by a second or third user to ensure their safety.
Since reconciliation happens through one system, that system also collects data on how the corresponding cash flows, which can be traced to provide better visibility for treasury, accounting, or finance. Automated reconciliation will also enable you to catch unpaid invoices and bills and is great for working capital optimization because it improves the timeliness of financial closing.
Automation can aid in maintaining transaction and reconciliation accuracy, ensuring a company's compliance with industry regulations. Reconciliation software can also prevent potential penalties for noncompliance and generates an audit trail that can easily be examined when necessary.
What defines a good payment reconciliation solution?
There are several excellent payment reconciliation software solutions on the market. But what defines a good solution? These are some of the key points to consider that differentiate good payment reconciliation solutions from the rest:
Accuracy and completeness
A good payment reconciliation solution should wholly and accurately match payments to invoices and other statements, ensuring that all transactions are accounted for and appropriately reconciled.
The solution should automate the reconciliation process as much as possible, reducing manual effort and minimizing errors.
A solution should be customizable to meet the specific needs of the business, such as matching rules, report formats, and integrations with other systems, such as accounting software, ERPs, different banks, and other software. It can be also important that you are able to make changes yourself, for example in the matching rules.
Real-time data access
Real-time access to transaction data should be covered so businesses can quickly identify and resolve any reconciliation discrepancies.
The security of all payment and transaction data must be ensured, protecting sensitive information from potential breaches or fraud. Users should only be able to access the data that is relevant to them, and four-eye-principles must be possible before reconciled payments are posted to the general ledger.
The solution should be scalable to accommodate the growth of the business and the increasing volume of transactions.
Any solution should be able to offer detailed and customizable reporting options, allowing businesses to gain insights into their payment processing, working capital, and financial closing.
A software provider should offer customer support, respond to inquiries, and resolve issues promptly and effectively.
Overall, a good B2B payment reconciliation solution should provide accurate and timely reconciliation, streamline processes, and offer businesses the flexibility and security required to manage their financial operations effectively.
The best payment reconciliation software in 2023
These are the top 10 reconciliation vendors to consider when you are looking for a solution. Note that the solutions are not presented in any particular order.
Nomentia is a European cash and treasury management solution provider with over 30 years of experience and more than 1600 clients globally. With Nomentia’s Software-as-a-Service (SaaS), you can build your cash and treasury management technology stack from scratch or add solutions to complement your existing technologies.
Nomentia’s payment reconciliation solution centralizes and automates payment reconciliation processes regardless of the ERPs or banks you use, by automatically matching bank statements with transaction data. Transactions can be posted to the general ledger or accounting software, and all reconciliation rules can be customized depending on the customer’s need.
Nomentia’s SaaS solution also offers solutions for payment automation, payment fraud & error prevention, liquidity management, cash flow forecasting, predictive analytics, cash visibility, bank account management, bank connectivity management, trade finance, in-house banking, risk management, FX risk, and treasury workflows and reporting.
Zoho is a company headquartered in India and offers a reconciliation solution as part of its accounting software, Zoho Books. The solution automatically matches payments with invoices and allows users to create custom rules for matching. It also includes a bank reconciliation tool that helps businesses ensure their records match their bank statements.
Zarmoney's accounting software includes a reconciliation feature that helps businesses match payments with invoices and reconcile their bank accounts. In addition, the solution provides real-time updates and alerts for discrepancies and helps companies to stay on top of their financial records. Zarmoney is headquartered in the US.
Xero, a solution provider based in New Zealand, offers reconciliation software that automatically matches payments with invoices and allows users to create custom rules for matching. The solution also facilitates the identification of discrepancies and alerts you when they occur.
Quickbooks offers a reconciliation solution as part of its accounting software. The solution automatically matches payments with invoices and includes a bank reconciliation tool that helps businesses ensure their records match their bank statements. Quickbook's headquarters is in the US.
Sage, a company located in the UK, provides an integrated reconciliation solution as part of its accounting software. The solution helps businesses match payments with invoices and reconcile their accounts. It also includes compliance tools to help companies to stay on top of regulatory requirements.
Upflow's payment automation and management platform include a reconciliation feature that helps businesses match payments with invoices and reconcile their accounts. In addition, through real-time updates and alerts for discrepancies, it helps businesses stay on top of their financial records. Upflow's headquarters are in the US.
Floqast is a solution provider based in the US. Their accounting close management software includes a reconciliation feature that helps businesses match payments with invoices and reconcile their accounts. Floqast also offers solutions for establishing auditable processes and improving financial closing.
Blackline’s financial automation and accounting software includes a reconciliation feature that helps businesses match payments with invoices and reconcile their accounts. The solution provides real-time updates and alerts for discrepancies and helps businesses improve their financial processes and reduce the risk of errors. Blackline has its headquarters in the US.
SAP offers a reconciliation solution as part of its enterprise software suite. The solution allows businesses to reconcile their accounts, match payments with invoices, and ensure their records match their bank statements. SAP's reconciliation solution is integrated with its broader suite of business management tools, enabling businesses to streamline operations and improve performance. SAP is a German company.
Selecting the right software to improve your payment reconciliation processes
While selecting a reconciliation software, it’s important to ensure that the solution's functionalities match your requirements. Not every vendor specifically states software features on their website, so it’s good to contact them to learn more. Another important consideration is whether you want to start adding other solutions on top of reconciliation. For example, if the solution provider only offers reconciliation services but you also want to do liquidity management or cash flow forecasting in the future, you’ll need to get another system additionally. Working with several solutions adds to more complexity compared to having all financial processes in one system. A final decisive factor should be how the software connects to your current technology stack and the banks you use. Without proper bank connectivity and system integrations, you can't leverage the centralization and automation of financial processes.