Balancing the Books – The Power of Reconciliation
Background
Following a thorough bank reconciliation for a client, including PayPal and Shopify receipts from their e-commerce trading, we discovered that a lot of online sales were not captured. This was surprising as third-party bridging software between the website and accounting software was in place so what was going on and how could we fix it?
We’re not software experts, so we had to use our accounting knowledge and detective skills as a first step.
Our Approach
This is a small business employing around 15 staff altogether with only 1 part-time in finance. Our existing role within the business, acting as Fractional Financial Controller, meant that we had fullaccess to the bridging software and the accounts. We had to find these missing sales and record them for the management information, VAT and the compliance accounts for year end.
Extensive testing and analysis were required. Reports were run from both the bridging software and the accounts, and we identified a common data point (which turned out to be the billing postcode), allowing us to track the missing sales – valued at over £100,000. On £900,000 annual turnover, that’s a lot to miss out on.
To find out the cause, we worked directly with the bridging software’s customer support team and found that there was a product mapping error. New products added on to the website did not have a corresponding code in the accounts system, which caused the bridging software to ignore the items as there was no mapping and not import those transactions.
Actions Taken
A quick fix was needed, as the client was still trading online and didn’t want to miss any more sales. We also needed to prevent it happening again.
We took three actions:
1. Fixed the problem going forward – we introduced a generic Stock Keeping Unit (SKU) for web orders in the accounting system. Mapping web orders in the bridging software to the SKU allowed us to catch new orders and prevent any being missed.
2. Collaborated with software support – we worked closely with the bridging software support team to identify which sales were missing. They assisted in running backdated imports to record the missing sales.
3. Improved processes – we put safeguards in place to prevent new products being set up without the relevant coding and mapping in both the website and accounts.
Outcomes
The client now has a reliable, fully integrated web sales and accounts system that ensures accurate sales recording. The case highlights the importance of regular reconciliation, proactive financial management and proper system integration. While automation and software streamline processes, human oversight is still essential to ensure integrations work correctly.
How can Porterdale help you?
Our practical experience and extensive knowledge of reconciling and analysis of numbers allow us to identify anomalies in accounting which can be missed during everyday bookkeeping.
We can look at the numbers and ensure that all transactions are captured accurately and effectively and introduce processes and procedures to mitigate the risk of it happening again.
Working on a fractional basis we can use our expertise without the cost of taking on a full-time member of finance staff.
For more details please contact us.
Words by Lindsey Owen
Pebble header photo by Hennie Stander