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Reconciling Merchant Bank Deposits to the GL

Susan Wayland's Profile

Merchant Bank Reconcilliation of Merchant Bank Deposits Discussion

 I am looking for some best practice processes in reconciling merchant bank deposits for Visa/MC/Amex payments from customers on our e-commerce site.  The process to reconcile the merchant bank payments to our GL / AR accounts is VERY difficult and takes about 2 days a month at our current volume level.  I am concerned it will become more difficult as we grow.  Does anyone have any ideas on best practices to reconcile merchant account deposits to the A/R in the GL?  Thanks!


Anna Bielecki
Title: Chief Financial Officer / Controller/Sen..
Company: ToBe Enterprises
(Chief Financial Officer / Controller/Senior Consultant, ToBe Enterprises) |

Dear Susan,
I helped few clients with this issue. It’s common because it has two elements that have to be synchronized: the method of merchant service depositing money in your bank account and how your accounting software captures daily credit card deposits. You have to learn the merchant’s processes and then develop your internal procedures to match that. Some of my clients changed merchant services because of this issue. I don’t suggest that, unless in your discovery you learn that your merchant service is not consistent on daily bases.
I’ll be glad to help you if you have further questions.

Ray Calabrese
Title: Treasurer
Company: Interim Treasurer
(Treasurer, Interim Treasurer) |

If your provider is deducting thier discount when they pay you it probably throws you off. You may be able to work out a monthly billing with them, so they charge you once and you'll know thier whole fee and how much cash you have. This worked for us when I was with an internet media company. Hope this helps, RC

Kelly Kruse
Title: CFO, Exec VP
Company: eParidigm Partners
(CFO, Exec VP, eParidigm Partners) |

I discovered the difficulties during my last contrat in the hotel industry. The key was getting the proper detail from the merchants account website.

Thomas Barry
Title: Accountant /Payroll Manager
Company: Thompson Island Outward Bound Education ..
(Accountant /Payroll Manager, Thompson Island Outward Bound Education Center) |

Try reconcilING daily. It keeps A/R up to date. So as you get closer to month end, it is easier to see who is late....... The statements (Visa,MC and AE) are easy to read. Check your operating fund daily. The difference between the A/R amount and the deposit should be the processing fee. You can make up a simple spreadsheet to track these transactions....Also make sure that you have a breakdown of the amounts that make up the total credit card "batch amounts".

Helen Rosen
Title: President
Company: Direct Approach Solutions, LLC.
(President, Direct Approach Solutions, LLC.) |

This is a problem. It is also hinged upon who your gateway provider, not just your merchant account. For example, I used at one company, and they were using Quickbooks. I downloaded the information from onto an excel spreadsheet on a daily basis. The file needed some editing before it could be uploaded up to Quickbooks. The information came over into Quickbooks the same way it was transferred into the company's bank account. Reconciling was a non-issue. I don't know if it's as clean with another gateway provider or another accounting software. But I'm sure it can be done. This is really the only effective way to handle it.

Hope that's helped. Helen

Carline Shaw
Title: Controller
Company: Retired
(Controller, Retired) |

I agree with everything previously stated. I also spent hours trying to reconcile these deposits. First we changed procedures so the internal accounting system was always updated at all registers in conjunction with the bank pulling the information from the credit card machines. 2nd, our Master Card and Visa processor took their 'discount' monthly, as suggested. We couldn't get Discover to agree. 3rd, we set up spreadsheets to reconcile cash, checks, and credit cards with Sales and AR daily. We also had a manual sheet we filled in that supported the spreadsheet, but with plenty of room for notes with more details (credit card batch numbers, accounting system batch numbers, the occasional two batches of one to one batch of the other, etc.). 4th, we always printed out the detail individual transactions in both systems.

The biggest problems seemed to be with credits (for returned merchandise) and with deposits (so the corresponding sales were recorded at a later date). For this reason we kept a separate log of deposits, and updated it with batch numbers when the sales were recorded.

Obviously our software didn't communicate with the processing company's software, so all of the work was outside both systems. This is a niche the software developers really need to look at!

Good luck to you.

Allan Weizmann
Title: CFO
Company: Morrocanoil
(CFO, Morrocanoil) |

You could also use a 3rd party sofware/service called ReconNet by Trintech which matches the bank deposits and the daily POS reports and advise you of any exceptions which you would need to investigate.

Michael Schwindle
Title: CFO / VP Finance
Company: Musician's Friend
(CFO / VP Finance, Musician's Friend) |

If you are looking to reconcile settlement batches, then daily recons is an effective way to ensure you are staying on top of the matter. If you have a need to do more transactional-level or customer-record level work, ReconNet appears to be the system of choice. Either way, don't get behind!

Darren Polite
Title: Controlller
Company: "in between"
(Controlller, "in between") |

All above together are great info.

If not "Integrated" solution like QUickbooks; you'll need to:

1. Retrieve Cash Deps per your banks cash manager (easy to export to excel and sort)
2. Download Ecommerce back-end reports (even paypal allows this as a csv file)
3.Work closely with IT/Ecomm site support to customize ecomm back-end reports that make data easily manipulated to reconcile from your Cash manager exported files of deposited batches.
4. perhaps set up a self-balancing set of accounts (undeposited cash account perhaps)that you journlize daily ecomm reports into and relieve when you journalize daily cash deposits.. perhaps with subaccounts for type of cc: amex/visa&MC so that reconciling is easier to track.. as stated above journalizing ecomm info will be BASED upon your merchant accounts pattern/system of depositing batches..and any ending bal. will be DEPS in transit for the month.

hope that helps!

Only issue is usually "CUT-OFF' at beginning and end of month".. which can be treated as DEPS in transit; and discount/monthly fees. those are usually deducted in a separate batch but depends on your merchant account set up.

hope this helps.

Saul Kemble
Title: Accountant
Company: National Association of Social Workers C..
(Accountant, National Association of Social Workers CA Chapter) |

To add my two cents to what Darren wrote, if you are using downloads to reconcile its important to understand your merchants cutoff times. I use three merchant accounts and have a clearing account for each, they close out the day at 9:00 PM, yet records date up to midnight, thus the cash flowing to the bank is really transactions from 9:00 the previos night until 9:00 the current night. I set up a clearing cash account for the merchant and record all cash receipts as a credit to that account. I use the merchant reports (I have set them up to automatically send them to me daily) to record our revenue streams with the offseting entry being a debit to that clearing account. At the end of a month the balance in that clearing account is reconciled and shown as deposits in transit. My system works great with the small exception of anything ran through AMEX, those flow a bit differently and require yet another clearing account to keep it simplified.

Turner Thomas
Title: Partner
Company: Clearview Solutions LLC
(Partner, Clearview Solutions LLC) |

I suggest that you contact BlackLine Systems. The company has a transaction matching module that will automate and optimize the credit card reconciliation process.

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