Posting credit card payments: How to do it right!

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Learn how to post credit card payments correctly, avoid common mistakes, manage balances, and keep your credit card account in good standing.

The three biggest challenges when posting credit card payments –. The best solutions for them.

credit card payments involve a multitude of challenges for accounting departments. Here are practical solutions to the important ones.

**Collective transfers and a lack of transparency**

Payment providers generally bundle all the payments made in a day and only transfer an amount (minus the withheld fees). So there is no allocation of individual sales.

Additionally the payment providers’ payment reports don’t always contain all the details and an exact breakdown of the fees.

**Solutions**

Ask your payment providers for payment reports that contain all the specifics of the transactions and the fees.

Use split postings in your accounting software. This allows you to divide payments into the individual claims to settle them cleanly.

Use automation software for settlement: reconciliation software interfaces like Matchbox from treibauf import the payment reports perform transaction-accurate reconciliation with the claims recorded at the cash register automatically create the matching posting entries – and automatically export these to your accounting system. This saves you hours of work.

**Discrepancies to fees/commissions or reversals**

If the collective payment differs from the claims at the cash register there may be several causes: the most frequent are new or unknown payment fees and chargebacks.

**Solutions**

It’s important to have a record of the different types of fees from the various payment providers: ideally you should create separate fee accounts (e.g. "Fees for payment providers”) and post the fees immediately when the collective payment arrives.

Monitor your chargebacks: each chargeback should be posted immediately as a reduction of the claim to avoid discrepancies.

Reconcile regularly: bank statements and payment reports should be reconciled at weekly so that differences are spotted early.

In reconciliation software solutions both the different fees for the payment providers and the chargebacks are incorporated into the automated transaction-based reconciliation. For you this means: two sources of error eliminated!

**Time difference between payment and receipt of payment**

Credit card payments are generally only credited after days. This means that the transactions and the received payments occur at times.

**Solutions**

Post sales to a cash-in-transit account so that received payments can be settled correctly later on.

Document the cycles of your payment runs –. Try to match the payment providers’ payout intervals to your posting periods.

Use accounting: at the end of the month create an entry to show any outstanding payments in the balance sheet – thus keeping your accounts clean.

Another advantage of solutions that automate transaction- reconciliation of credit card payments is that you’re only left with a small number of payments that aren’t matched automatically. Open received payments can be identified faster as a result.

**How Matchbox makes it easier to reconcile and post credit card payments**

Anyone wanting to avoid the headache of posting and transaction-accurate settlement of credit card payments should definitely consider a supplementary software interface.

Matchbox from treibauf is an user-friendly solution in equal measure. Automated reconciliation and posting of corresponding entries not causes far fewer errors.

**Full focus on the exceptions!**

The few special cases (, between 0.01% and 0.02%) that can’t be reconciled and posted automatically finally get the amount of attention they deserve.

1. Posting the sales (recording claims in the cash-in-transit account)

On the days when sales occur I first record the claims in the cash-in-transit account. I have sold the goods. I have not yet received the money from the payment providers. I record each sale individually in the cash-in-transit account:

01 March:

Cash-in-transit account acquirer €100 (debit side)

in sales revenue €84.03 (credit side)

in VAT €15.97 (credit side)

02 March:

Cash-in-transit account acquirer €50 (debit side)

in sales revenue €42.02 (credit side)

in VAT €7.98 (credit side)

03 March:

Cash-in-transit account acquirer €150 (debit side)

in sales revenue €126.05 (credit side)

in VAT €23.95 (credit side)

→ Result: On 03 February the cash-in-transit account shows a balance of €300 (€100 + €50 + €150) on the debit side.

Clearing the collective entry (based on the settlement files)

In this step if I am reconciling manually I first need to download the payment report, called settlement files from the acquirer. The report is often in CSV or PDF format.

If I am reconciling manually I then start to match the data in the report with the cash register transactions recorded in the cash-in-transit account. This step ensures that every card payment logged at the cash register is also actually received from the acquirer.

Assuming that the payment providers keep the incurred fees directly the following information should appear in this example:

01 March: €100 €2 fee = €98

02 March: €50 gross – €1 fee = €49

03 March: €150 gross – €3 fee = €147

Payout amount: €294

I check whether this data matches the cash register transactions entered in the cash-in-transit account. If it matches I transfer the cash-in-transit account to the clearing account taking the incurred fees into consideration.

The corresponding posting entry then reads:

Clearing account credit card payments €294 (debit side)

Expenditure for payments €6 (debit side)

to cash-in-transit account acquirer €300 (credit side)

→ Explanation:

Cash-in-transit account: €294. The amount I am expecting from the acquirer.

Expenditure: €6. The withheld fees.

Clearing account: €300. The total amount of the cash register transactions.

Posting the payment to the bank account

If the collective payment goes into the company account on 05 March I post the actual money received to the bank account and settle the clearing account at the same time.

Bank €294 (debit side)

to clearing account credit card payments €294 (credit side)

→ Results:

The cash-in-transit account was already settled when reconciling with the payment report (€0).

The clearing account is also settled to €0 with the money received.

The bank shows the correct received payment of €294.

This workflow ensures that my claims are settled correctly and all fees, for credit card payments are posted properly. At the time I always have an overview of open items and expected payments.