September 16, 2024
Peter Drucker once said that in business, “whatever gets measured gets managed.” But what happens when your measurements are off, especially when it comes to your financial records and data? There’s no telling the revenue you could miss out on. And if the data is complex or overly fragmented, it can quickly become unmanagable.
The problem is that financial reconciliation will inevitably be complex for larger companies. That leads to inaccuracies at startling rates. In one recent survey, half of the financial decision-makers at large companies said they only accurately reconcile their payments less than 80% of the time.
Half of the financial decision-makers at large companies said they only accurately reconcile their payments less than 80% of the time.
In the spirit of Peter Drucker’s maxim—that measuring leads to improvement—unified reconciliation is the most effective way to track, measure, and ensure proper bookkeeping for all transactions and payment channels. You can reduce unreconciled payments by implementing a payment orchestration solution to reduce manual errors, streamline reconciliation, and enhance transparency. Let’s look at how it’s done.
Traditional reconciliation is riddled with problems. Most of which are created by one of these common pitfalls:
And these are just a few of the most common challenges that fragmented reconciliation solutions add to the mix.
Without that data, how can a business accurately forecast its future? It’s a bit of a trick question. As Andy Murphy of Bank of America told PYMNTS.com, “One of the biggest blockers to tapping into [increasingly rich data resources] tends to be a lack of visibility … Companies have access to so much data in their systems, but the problem is that it’s fragmented and it’s messy. And so quite often, it can become very difficult to transform that data into something more meaningful.”
That translates to missed opportunities: you don’t know what you’re missing out on without accurate views of your payment data. Other issues—like higher risk of fraud and compliance problems—only add fuel to the fire.
“One of the biggest blockers to tapping into [increasingly rich data resources] tends to be a lack of visibility …" - Andy Murphy, Bank of America
In short, subpar reconciliation processes make it difficult for companies to assess, forecast, and scale. That means missed opportunities for strategic insights, poor self-assessment, and long-term compliance problems. Fortunately, there’s a simple way out of this mess: unified reconciliation via payment orchestration solutions.
A payment orchestration platform’s role? Simplification. A payment orchestration platform will centralize key payment processes, data, and code into a single, secure location. Consolidating these essential components of payment processing comes with a lot of benefits:
With your payment orchestration platform in place, you can access all the features above. But perhaps more importantly, you’ll unlock some key benefits in your payment reconciliation processes.
Revenue recovery: Payment orchestration can reduce your operational costs. Less manual labor and more automatic, streamlined processes mean you’re spending less time struggling to get the financial reports you need. That translates to saving money.
Next-level visibility for growth: Enhanced financial reporting makes your business more nimble. With automated reconciliation in place, you can generate a comprehensive, accurate financial report at the drop of a hat. This data can fuel better decision-making and compliance. This builds forward momentum for the business to improve its payment reconciliation processes and streamline its methods, which gives the business more opportunities to scale. After all—you’ll now have the insights to identify any key problem spots if they arise.
Airbnb had a problem: payment complexity. With dealings in 191 countries and over 70+ currencies, its payment and financial accounting system had to be complex.
Cleverly, the team used many of the principles of unified payments to simplify these transactional and data challenges. Initially, they used MySQL database triggers to capture changes to reservation and payment records in real-time. While it worked initially, it became a bottleneck, preventing them from scaling effortlessly. MySQL's limitations, particularly its inability to handle more complex data flows, made it difficult to support new products as Airbnb grew.
SQL is good for lightweight data transformation,” wrote Alice Liang, Engineering Manager at Airbnb. “It is not designed to handle complicated business data flow.” So the company transitioned away from its outdated orchestration systems for a more scalable and flexible solution.
The result? “Our financial reporting pipeline scales both on a product basis, and on a runtime basis,” wrote Alice Liang, Engineering Manager at Airbnb.
Unifying payment reconciliation with a powerful orchestration solution can have a cascading effect throughout your entire enterprise. Optimizing your payments system to automate processes, reduce human error, and access real-time financial updates not only saves you money but can also help you scale easily. It frees your company’s time and capital to focus on large-scale, strategic decisions.
Instead of relying on third-party cloud-based payment orchestration platforms to handle all of the above, you can own your solution with a custom-built payments hub. Keeping your payment processing systems in-house allows you to be in control of security, updates, and processes. If an out-of-the-box solution isn’t suitable for your company, we can help.
Clear Function’s expert engineers specialize in payment orchestration solutions for large businesses with complex issues. Want to find out how it works? Book a free discovery call to find out how payment orchestration can help your organization achieve the benefits of unified reconciliation.
