The payment processing industry has changed so much and become so dynamic in recent years, it can be difficult for merchants and other small businesses to keep up with new standards and best practices. Although it might not sound particularly exciting at first, the integration between payment transaction processing and accounting software is without doubt one of the most important of those new standards.
Payment processing integration allows for payment transaction data derived from credit/debit card or other electronic payments (such as those made over the Internet or on mobile devices) to automatically flow into a business’ accounting or ERP system when a sale is made. It does away with the need to manually enter payment transaction data and reconcile accounts, saving valuable time and reducing labor costs and eliminating the possibility of human error. With payment processing integration, the data for each sale seamlessly posts into the accounting software, similar to how the money from a transaction is directly deposited into a business bank account.
It’s getting to the point that merchants and small businesses that don’t have the ability to integrate payments directly into accounting software are at a distinct competitive disadvantage. Fortunately, the technology to make it happen is affordable. And although there are initial costs to implement such a system, the benefits of an integrated payment solution greatly outweigh those costs.
Why is payment processing integration important?
Customer payment preferences have changed everything. These days, every type of business, both in the business-to-consumer (B2C) and business-to-business (B2B) sectors, must offer their customers the ability to pay in a multitude of ways, and thus accepting credit/debit cards as well as mobile payments, gift cards, and even PayPal payments is no longer merely an option but a necessity.
Before the ability to integrate the payment process, merchants would have to wait for a batch report from their transaction provider, and every transaction had to be manually entered into the accounting system. The reliance on manual data entry also created greater risk for human error, which impacts financial reporting and account reconciliation.
Now with the capability to have transaction data from a multitude of sales channels seamlessly flow directly into the business’ accounting software, accounting tasks that were once labor intensive are now done automatically and error free. Smart businesses have come to realize that customer preferences for multiple forms of payment actually provide them with the opportunity to optimize accounting operations and provide access to real-time data that can help them run operations more efficiently and manage cash flow more effectively through payment integration.
4 benefits of payment processing integration
1. Integration saves time
Of all the advantages that an integrated payment processor offers small and medium businesses, the time saved by no longer requiring individuals to manually enter credit card and other electronic payments into accounting software is without a doubt the most valuable cost-saving feature.
The batch information that used to be delivered from the payment processor and needed to be recreated now immediately appears in the accounting software or ERP system. That’s a real advantage. Rather than having to look at an Excel spreadsheet or, say, screen number one, which gives the sales totals, and then bringing up screen number two, which is where the transaction information is entered manually, the transaction data automatically flows into the system without any employee or business owner interaction.
2. Integration reduces human error
Adding the human element into the payment transaction process increases the opportunity for errors to be made, either in the form of entries being duplicated or data entered incorrectly or applied to the wrong account. The results could lead to time lost trying to locate the error as well as frustrated customers as a result of overbilling or not having a payment properly attributed against their account or erroneous tax reporting. The seamless flow of data from the point of transaction directly into the general ledger or immediately credited against an invoice, no matter where the payment is taken, eliminates entry errors and provides confidence that accounts are accurate.
3. Integration increases cash flow
Having an accurate and up-to-the-moment understanding of cash flow is a vital element for small businesses. No company can stay in business long if it does not have adequate cash on hand to pay vendors, employees, taxes, and other operating costs. Prior to the ability to process payments electronically and have the data from those transactions integrate directly into the general ledger or ERP software, businesses were often subject to long wait periods for invoice payments and delays in assessing current cash flow status. Having an integrated payment processing solution that provides reliable and current reports on exactly how much money a business has available at the end of each business day helps it better manage payroll and inventory, pay vendors, and make better, more informed operating decisions.
4. Integration reduces labor costs
Integrating the payment process also creates savings in terms of costs allocated to the business workforce. With payments feeding directly into the general ledger at the moment of payment, it is no longer necessary to have a dedicated accounts receivable employee on payroll or pay an accountant solely to reenter data from credit card transactions to reconcile accounts. In addition, costs and time spent training employees to process payments have been greatly reduced due to the entire operation’s becoming less complicated and easier to learn.
A matter of when, not if
For practically every business, it is a matter of when, not if, it implements an integrated payment processing solution. As customer preferences for making payments continue to evolve away from cash and check transactions, it just makes sense to have the data from electronic payments seamlessly flow into the business accounting system without the need for manual entry.
Visit Sage Payment Solutions’ site to learn more.