If you run or manage a retail business, you must have firm control of your finance to achieve success. To be aware of how money is spent on various operations and making an informed decision about your store, you should practice pos reconciliation regularly.
Let’s take a deeper look into POS reconciliation and how it benefits retailers.
POS reconciliation is a no-brainer for every retailer that understands the importance of checks and balances in business. POS reconciliation is the accounting task of manually checking two sets of records against each other to ensure no discrepancies. It helps to ensure that all your financial activities and all numbers are accounted for properly. POS reconciliation can be at any time but more frequently ensures discrepancies are noticed and fixed right away.
As a store manager, you find yourself completing mundane tasks each day. POS reconciliation might appear to be one of such tasks. However, as simple as it seems, POS reconciliation is essential for spotting cash mishandling. Doing this can help your retail business achieve a measure of accuracy in your financial record.
Human errors are very likely but can significantly reduce. When your business scales, your bank account activities increases, and it is easy to overlook some transactions in this situation. With a solid POS reconciliation, you can keep your books accurate, identify discrepancies, and catch errors before they become a bigger problem.
Sometimes we do not have the people with the best intentions surrounding us, such that questionable transactions and miscalculations in the books are not honest mistakes. It just might be a sign of something underhanded. Employee thefts can cost your business thousands, and if you are not vigilant about your account, dishonest people will take notice and exploit that. By performing reconciliation, you can quickly identify unwarranted transactions and challenge unauthorized actions with full facts in hand.
In addition to reducing accounting errors and unauthorized transactions, regular POS reconciliation gives you a much more exhaustive idea of your business wellbeing. You have presented reports about fast-moving products, areas where you are losing money, and also get an overall in-depth knowledge of your business and its health.
Regular POS reconciliation means that financial problems can be caught and managed by your accountant. Inaccurate bookkeeping can cause big headaches and extra expenses down the road.
Although solid POS systems come with built-in inventory management tools, POS reconciliation can help you have a better understanding of what is happening at the back office. You know what needs reordering and how well particular items are selling.
Now that you understand the benefit of POS reconciliation let us examine ways to go about it.
To start, firstly gather everything you need together. Your POS system, your bank statement, and your internal accounting register. Take your time to look through your bank statements and internal account register. Compare transactions and mark them off as you find each match.
The next step is to note bank deposits or payments that you can not back up with other evidence – un-cleared cheques, ATM charges, overdraft fees, or automated transactions not cleared by your bank. Furthermore, review your internal account records and highlight any inflows or outflows that do not show up on the bank statements. Subtotal of these items will then subtract from the total balance on the bank statement.
Examine your internal records to check for credits and deposits, and then cross-reference them with your bank statement. Identify transactions that are yet to be confirmed by your bank, then add them to the balance on the account statement. The bank statement may display deposits not reflected in your records. In these instances, add the entries to bring your account record up-to-date with the bank.
Although not often, however, banks make mistakes too. After conducting a thorough examination of the statements and your internal records and find anomalies that you can’t explain, contact your bank. They can investigate and confirm if there has been an error. If so, it shouldn’t be hard for them to add or subtract the amount from your balance to correct the problem.
With the POS reconciliation underway, your internal records and bank statements would align with each other. Meaning, both balances will now be the same. It is advisable to notes any discrepancies or differences between your records and your bank account. Having these notes will be helpful for the subsequent POS reconciliation.
In a nutshell, comparing your expected sales, that is, those in your POS software with the actual numbers from your credit card processor and cash drawer can protect you and your business against accounting mistakes, theft, fraud, and other financial hardships.
Regular POS reconciliation can furnish you and your managers with an in-depth understanding of your business – what is happening, who is doing what, when, and how often. By regularly auditing all the transaction data, you’ll be able to make more informed and better decisions regarding your business.