5 Steps For Performing POS Reconciliation
Businesses of any size should utilize their POS system insights to create a more effective financial management process by undertaking regular POS reconciliation.
A point of sale (POS) system is the technology a merchant uses for completing transactions. Companies can extract valuable sales data and customer shopping information from the POS. Therefore, understanding how to analyze this data and ensure its accuracy is viral, whether it is a large enterprise or small business.
POS Reconciliation Explained
POS reconciliation refers to the accounting operation where two sets of records are measured against one another to determine if the figures match. This can include cash reconciliation and balance sheet reconciliation.
The process allows transparency in transactions to understand whether all amounts are accounted for, or whether there has been a discrepancy in the sales recording process. Essentially, POS reconciliation confirms whether the amount that has left the account is the same as the amount that is spent.
Businesses should strive to perform reconciliation accounting about once a month at least. Once the financial institution of that company issues the monthly financial statements, this is a good time to compile all of that data together. However, POS data can be reconciled more often, especially if the business handles large volumes of transactions each day. In this case, it may be best to check POS transactions daily.
Benefits of POS Reconciliation
Regular POS reconciliation will ensure that businesses can stay in control of their finances, and are able to notice if any errors or potential fraud occurs. Maintaining this clarity and transparency in financial activity allows for continued cash flow and prevents finance-based discrepancies in the future. Below are additional benefits of performing POS reconciliation.
- Prevents Accounting Errors
- Secures Business Deposits
- Simplifies Bill Paying
- Highlights Unauthorised Transactions
- Saves Money
How to Perform POS Reconciliation
Below are the 5 key steps to accurately perform POS reconciliation.
1. Compare Statements and Internal Records
Step one starts with gathering all of the information together, from bank statement balance sheets to the internal accounts register. Compare the numbers of both and mark off the transactions that match as they're found.
2. Identify Transactions that Don't Add Up
As transactions are being matched, also take note of payments or deposits that don't have other evidence to back them up. These could include uncleared checks, overdraft fees, automated payments not cleared by the bank, or ATM charges. Highlight payments on internal account records that are not present on bank statements. The subtotal of all of the unmatched payments will now be subtracted from the total bank statement balance.
3. Verify Incoming Data on Both Documents
Cross-reference the bank statement with internal record checks and deposits. Any of these that are not yet confirmed by the bank should be added to the balance on the statement. Note that bank statements may show deposits that aren't on the internal records yet, and this is where entries to internal records can be added to bring the data up-to-date with the bank account.
4. Communicate with the Bank
Sometimes, although rare, the bank can make an error. After a comprehensive examination of records, if unknown numbers or other data is revealed, businesses will need to contact their bank. This is essentially a bank reconciliation, where the bank will do a thorough investigation on their end to confirm whether this is an error on their side that they can rectify.
5. Keep Records Clear
Once the balances of internal records and statements match, businesses should make note of the discrepancies that came up during the account reconciliation process. Having this information on-hand for reference can help to detect errors faster during the next POS reconciliation, and reveal any consistent discrepancies, which would point to a flaw in the overall system of payments.
Taking the time each month to perform POS system reconciliation can lead to increased financial data accuracy and transparency. By closely monitoring all transactions, business owners can feel more confident in their decision-making processes.