What is Reconciliation And Its Importance For Sellers
The reconciliation of accounts receivable is the process of matching the detailed accounts of unpaid customers billing to the debtors total stated in the general ledger. This matching procedure is significant on the grounds that it demonstrates that the general ledger figure for receivables is supported.
The management of debtors is significant in light of the fact that the timing of receivables is the main consideration in the company's cash flow. Reconciling the individual marketplace channel account balances with the general ledger balance establishing the accuracy of the balance sheet asset.
The payment reconciles consists of:
- Successful Order
- Damaged Return.
- Others Return
- Canceled Orders
- Other Deductions
Importance of reconciliation for sellers
Reconciliation is significant for all merchants in light of the fact that the sellers can get an information report on how much cash it is deducting and accepting from marketplaces, regardless of whether it is courier charges, commission expenses, advertisement, and so forth.
For sellers, reconciliation helps in
- Matching the payment.
- To know for which orders the marketplace has not paid.
- To find any extra commissions or logistic charges deducted.
- Can claim for refund of the amount which is wrongly charged after reconciliation is done.
How/Why Is Payment Reconciliation a Great Problem to Solve?
"E-retail incomes are anticipated to develop to 4.88 trillion US dollars in 2021 around the world" asserts an eMarketer study.
With such quick development, eCommerce marketplaces are not, at this point a channel of decision for sellers, yet a key basis to scale their organizations.
With the coming of innovation and the accessibility of numerous eCommerce software solutions in the market, it has become exceptionally simple for the merchants to locally onboard marketplaces and begin selling.
But, receiving and tracking online payments is a challenge that many sellers still face today.
At that point, the quick inquiry that strikes a chord is – Are sellers in marketplaces truly bringing in cash?
Every market place has its own bonus structure, installment terms, expenses, merchandise exchanges, penalties, and different charges.
It gets overpowering for a seller to monitor numerous things at various marketplaces, particularly deductions that marketplaces like Amazon and Flipkart make before paying their dealers.
Types of deductions made by marketplaces
Commission expense – It is the fee charged by market places for promoting and selling the product of a dealer.
Shutting expense – It is an extra fee charged on every item sold.
Transportation expense – It is the delivery charge that is deducted from the payment if the dealer chooses the delivery administrations gave by the market places.
Warehousing expense – It is the storage fee charged when the seller uses the warehousing and storage services of the market places.
Discounts – The discounts which are offered by the dealers legitimately, or by the marketplaces are deducted from the final payment.
Service level agreement break and penalties
Another significant cost that the marketplaces force on the dealers is 'Penalties'.
A merchant goes into a Service Level Agreement (SLA) with market places where a service is officially characterized as procurement time, delivery time, obligations of the two parties, and so forth.
On the off chance that a merchant doesn't hold fast to the service measures according to SLA, at that point marketplaces reserve the privilege to penalize them.
For instance, on Amazon, if a request is dropped by a merchant under any conditions other than by the purchaser’s demand then the dealer will be penalized by 8.5% of the estimation of things as the canceling charge for sellers fulfilled orders.
Despite the fact that SLA is critical in setting great service norms, explaining liabilities and responsibilities, and managing expectations for all the stakeholders, the issue arises when the seller isn't the one to blame, and still, he gets accused of a penalty.
For instance, if a seller affirms and packs the item on the schedule yet the logistics partner neglects to update the status on his framework subsequent to picking it, at that point additionally it would be viewed as an SLA breach and the marketplace will penalize the seller.
In such a situation, it becomes vital for a seller to monitor all the evidence with the goal so that he can claim a refund.
Without an effective payment management system, it is easy to lose track of payments given the tremendous transactional volumes, complexities of shipments, and not to overlook returns.
Because of this, there are immense misfortunes that the vendors accumulate without knowing the explanation. Scary, right?
Strategies for Payment Reconciliation
So what alternatives do sellers need to keep their best interest at heart? We should investigate a few different ways through which eCommerce business payments can be accommodated:
Market Seller Dashboard
Every marketplace gives its sellers a seller panel that records all the data i.e. the things sold and the payments got.
This sort of eCommerce business payment framework is productive when a seller is present in a single marketplace.
At the point when the business develops, the seller onboards various marketplaces because of which the number of dashboards increase, making the entire procedure of tracking payments lumbering.
Manual recording in excel sheets
While spreadsheets are an astounding tool for organizing information and making essential analysis, it may not be the best apparatus for eCommerce payment reconciliation.
In the event that you are a small seller with limited products on few marketplaces, at that point, an excel sheet may work but if you are developing business, at that point a spreadsheet may not end up being a proficient instrument for you in the long run.
Payment Reconciliation System
A marketplace payment reconciliation programming encourages sellers to effectively follow their payments for each order received.
It permits merchants to take control, drive cost savings, increment productivity, and have greater insights into their financial data with no physical work with excel sheets.
Following payments/reasonings can be effortlessly followed by a regular eCommerce business payment reconciliation framework:
It relies on the item's class and is determined to utilize a level of a unit's total cost. The items in various categories have a per-item minimum referral fee.
The framework helps you to distinguish the commissions that are charged mistakenly and provide information to the same.
Marketplaces charge fees for shipping the order from the warehouse to the Buyer’s address, based on the dimension, the weight of the product, and the location of the delivery.
They choose the category of transportation (Little, Standard, Over-size, and so forth.) depending upon the size of the item.
On an occasion where a shipping category is wrongly recorded, the system helps in recognizing and accommodating such overcharged shipping expenses.
This charge incorporates the expense of physical recovery, packaging, and shipping of the item.
The system provides a report for all those orders for which marketplaces capture wrong dimensions and hence are charged incorrectly.
Inventory Missing without Repayment
In some cases of reverse logistics, though a purchased item may be returned by the customer, a marketplace may refund the buyer but inventory is not returned to the fulfillment center.
For a similar thing, the seller ought to have the option to track and claim repayment – however, it can't.
The system helps provide real-time information for such orders against which a return is created, identify their status, and claim both payments & missing inventory.
Carrier Damage without Repayment
The marketplaces need to repay the sellers for any harm that has happened during the transportation of the item through their partnered carriers.
In the event that this doesn't occur, you can raise cases and guarantee repayment utilizing the report gave by the framework
Replacement without Repayment
The seller may not get payments for all the things dispatched as a component of a request or for substitution requests made by the client.
The framework records every such exchange and gives a report to such requests against which the merchant has received less or no payment.
eCommerce business is an extremely requesting and vulnerable business and eCommerce business payment reconciliation is profoundly basic.
Evantage has banded together with Market Reconciliation specialists to permit you to take control, drive cost investment funds, increment productivity, and have more noteworthy knowledge into your monetary information at a click of a button.