Unified Reconciliation: How Payment Orchestration Simplifies Financial Management

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.

‍

The Challenges of Traditional Reconciliation

Traditional reconciliation is riddled with problems. Most of which are created by one of these common pitfalls:

• Time-consuming manual reconciliation: Relying on manual reconciliation increases the possibility of human error. It also costs a lot of time and labor to perform, and it delays your financial reporting.
  ‍
• Errors and inconsistencies: When you use multiple systems, you fragment your payment data—creating a recipe for human error. If you don’t have a unified reconciliation system in place, you’ll have to lean on manual processes to collect and collate data where it’s all too easy to make those mistakes.

• Complexity leads to inaccuracy: If your reconciliation processes are mostly manual, they’re also complex. And the more complicated they are, the more difficult it is to sift through all that fragmented data and come up with the right solutions. Once again, you have a recipe for the disaster that is delayed financial reporting. When your reports are late, you can miss opportunities for improving your strategic decisions. Even worse, you might get behind on basic compliance requirements. This creates a vicious cycle where, in an effort to keep up, more errors are made.

• Lack of visibility: A fragmented system likely means you have limited visibility into your business’s payment data. This will make getting a clear, consolidated view of your business’s financial health difficult or near impossible. Without a high level of visibility, you can’t even begin to diagnose your company’s financial issues.

And these are just a few of the most common challenges that fragmented reconciliation solutions add to the mix. 

The Opportunity Costs of Poor Payment Reconciliation

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.

‍

How Payment Orchestration Simplifies Reconciliation

Streamlining Reconciliation with Payment Orchestration Platforms

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: 

• Centralized data management unifies transaction data by consolidating data from different channels and payment acquirers. Each business can refer to the orchestration platform as its single source of truth for their analytics.
  ‍
• Automation of reconciliation processes removes the problem of labor-intensive manual effort. Plus, you can reduce the issue of human error, as well. This won’t only speed up reconciliation tasks; it will free up your time to focus on big-picture projects. You can keep your attention trained on strategic decision-making and business growth without the headaches of late or inaccurate reports. Meanwhile, payment reconciliation remains streamlined and accurate in a unified dashboard.
  ‍
• Real-time reporting and insights help on the latter point. Orchestration platforms offer real-time access to your payment data. This makes it easier to handle your financial reporting, putting real data in the hands of key decision-makers who need to determine the business’s strategy moving forward.

‍

‍

The Benefits of Unified Reconciliation

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.

‍

Success Stories: How Enterprises Benefit from Unified Reconciliation

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.

‍

Simplify Your Financial Management with Clear Function

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.

‍

Ready to Simplify Your Payments Strategy?

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.

‍