Alisa Amupolo
Customer account statements that reflect all payments made by customers, particularly those settled via the Electronic Transfer of Money (EFT), should be a norm, rather than a rare occurrence, especially for large service providers.
Ultimately, this is prudent account receivable management, where the flow of money from customers is accurately reflected and posted correctly and timeously to each customer’s account.
Indeed, in this digital age and time, the majority of providers encourage customers to pay fast to improve their cashflows.
This they do by introducing EFT payments when issuing their monthly billings for recurring customers.
The invoices apart from the money payable would comprise the reference number to be used and often is indicative of an email on where such proof of payment (PoPs) should be emailed.
However, several organisations remain challenged with the allocation of payments in real time once the customers have initiated the payment via EFT and emailed the proof.
Customers are then advised to rather walk in and initiate payments over physical channels – as such transactions are posted to their accounts in real time, which is not ideal.
This is due to a widow period, where the processing of EFT payments is manually reconciled and payments are only allocated when verification with bank statements has been completed at the back end – at times after the next cycle of billing has closed.
The effect of this is a client having an outstanding balance and either being locked out of service or being disconnected at times and in some instances may even attract charges i.e interest or reconnection fees.
Some entities also face a customer reconciliation backlog, which may result in an ageing balance escalating to bad debts inaccurately – i.e over 120 days.
These very manual intervention in the face of digitalisation and fintech has come to defeat the whole rationale of electronic channels as a method of payment and ultimately boils down to bookkeeping practices in far as account receivable is concerned.
Yet, there are entities with large customer bases in Namibia that managed to get it right and less to do with manpower and more to do with an application overlay, which integrates the banking system and the accounting system, resulting in the allocation of payments to customers account seamlessly and in real time.
This minimises the volume of customers’ queries had they received a new statement that does not reflect previous payments, which mounts itself into an administration hurdle absorbing business time, which could be productively used to enhance customer experience.
However, for small, medium and large businesses that are still grappling with payment reconciliation protocols, GoCardless offered some useful tips for payment collection reconciliation in this case for inbound payments and the internal reconciliation process.
Amongst others, GoCardless suggested creating regular weekly reconciliation events and frequent reconciliation audits as it is easier to detect discrepancies and makes it less burdensome.
On the technology front, they advised that the best practice to streamline the reconciliation process is to use software that integrates with current systems particularly direct debit processors.
This enables the company to see all the payments made into the business accounts and their reconciliation status.
Henceforth, accounting platforms that have integrations with payment gateways and can integrate with existing transaction reporting systems are ideal for reducing manual errors and boosting efficiencies.
Lastly, GoCardless concluded that most businesses will find it a valuable investment to modernise existing manual processes and replace them with systems that streamline accounting practices, making it easier to implement an efficient and accurate reconciliation process.
Henceforth, EFT introduction by every service provider in Namibia that collects money for services rendered on recurring bases should work in tandem with robust accounting systems that are fully integrated with application overlays to enable real time reconciliations.
This then salvages any business from having an EFT payment records isolated from the day to the day accounting system and that is over-relying on manuals recons which is prompt to delays in processing and oversight errors.
The digitalisation of business processes hence is the future and indeed presents ample benefits for the vital process such as accounting receivable’s customer payment reconciliation.
*The opinions expressed in the article are that of the author alone and are in any way linked to affiliates.