skip to navigationskip to main content

Phone: 01793 852121 


What Is Credit Card Reconciliation: Tips for Efficient Bookkeeping

Having a good accounting system is not only crucial for a successful business, but it is also legally required. However, it can also be confusing and take up valuable company resources.

Aside from staying on top of UK tax return filings and management accounts, bookkeeper-accountant teams often struggle with a bookkeeping and accounting task every month, which is credit card reconciliation. 

This article explores what credit card reconciliation is, why it’s important, what the process involves and tips to make reconciling credit cards easier. Let’s get started!

businesswomen are calculating expenses based on bill spending

What Is Credit Card Reconciliation?

Using credit card reconciliation, accountants ensure that transactions on credit card statements correspond to those on the general ledger. A ledger is accurate if all payments match those on the statement, allowing the books to be closed. When certain parts of the ledger are not in agreement with credit card statements, the accounting department needs to determine who made these payments and the reason for the discrepancy.

Financial closes typically occur monthly, with larger closes occurring at the end of each quarter and year. Reconciliation plays a crucial role in the closing process and records integrity is ensured through it.

Why Is the Credit Card Reconciliation Process Important?

Similar to other reconciliation procedures, the reconciliation of credit cards is an integral part of your accounting processes. Transactions involving credit cards mostly occur digitally, but errors can still occur.

Your accounting process will be more accurate if you reconcile credit card and merchant account statements. Plus, it assists you in detecting fraud.

Banks and credit card companies are not error-free. Transactions can be subject to discrepancies. Company employees can lose receipts containing purchases made using credit cards. To ensure accuracy, reconciliation is necessary.

What Are the Steps in Credit Card Reconciliation?

A credit card reconciliation involves matching general ledger records with credit card statements. Let’s examine each step in more detail.

Gathering and organising receipts

Expenses are verified by receipts, making it easier to keep track of spending. Credit card purchases, for instance, are accompanied by an invoice given to the customer at the time of purchase. Receipts should be obtained from all cardholders and kept in a safe place for future reference.

Receipt collection and storage can be handled manually with paper-based spreadsheets and reports or automated using expense management software.

Making sure expenses are matched with transactions

The credit card statement must be compared to the general ledger for every expense. However, this can become very time-consuming, depending on the number of transactions you have. So you can opt to streamline transaction matching using an automation tool.

Rectifying errors

Errors can occur either intentionally or unintentionally. Therefore, your finance teams should be diligent in identifying mistakes and informing the bank authorities. You should take action in a timely manner if you become aware of any unauthorised behaviour or fraudulent activities.

What Are Some of the Challenges in Credit Card Reconciliation?

Your finance team or accountancy manager can face the following challenges during credit card reconciliation:

Data from multiple sources

Managing different data formats, deadlines, and details related to card-based processes is not an easy task. Some organisations still struggle to compare various statements and reports after downloading them and analysing them for hours.

Reconciliation inaccuracy and inefficiency

The credit card reconciliation process is prone to inaccuracies and inefficiencies, putting the company at risk of financial exposure. In addition, traditional reconciliation methods rely heavily on employee involvement, which leaves room for human error.

Sums in batches

The process of connecting batched sums to detail-level transactions can be nearly impossible. Due to the difficulty of maintaining daily manual reconciliations, many organisations delay the process until the end of the month. Hundreds of transactions then need to be sorted through, further complicating matters.

An increase in transaction volume

Credit cards have revolutionised business payments in terms of speed and efficiency. There is, however, a high volume of transactions associated with this. Furthermore, with the increasing number of transactions, there is a greater chance of missing human errors, duplicate entries and incorrect data.

Processes that involve multiple steps

Comparison of lists A and B isn’t all you have to do when doing credit card reconciliations. To maintain accurate records, reconcilers need to interact comprehensively with their data, such as researching, creating reports, analysing trends and transferring data to other systems.

Tips for Improving Credit Card Reconciliation

Leverage entry automation

To make data entry and matching more manageable, you can use advanced software instead of your finance team and employees manually entering and verifying expenses. Besides saving time, this solution also reduces the risk of human error. Matching transactions can take hours, days or weeks, and your team may still miss fraudulent or duplicate charges.

Ensure employee compliance in real-time

Having an automated solution in place ensures compliance for all stakeholders. It can notify all stakeholders in the event of a flagged expense and policy violation. Using intelligent tools can also help you automate policy checks to prevent fraudulent activity, double billing, and employee overspending. This simplifies the process of tracking policy violations and resolving them.

Streamline the process

You can save valuable time and quickly detect errors with the right software. It helps the company stay on top of audits and tax returns. Additionally, it increases employee compliance.

Several phases and cycles are involved in the reconciliation of credit cards. These processes must be followed to the letter to prevent errors in execution. Teams are also better prepared if they clearly understand roles and responsibilities.

Put an End to Reconciliation Woes

Credit card reconciliation is a vital bookkeeping process that can help ensure accuracy in your financial records. Following the tips above, you can streamline this process and avoid common mistakes. When it comes to tax return filings, credit card reconciliations and more, Nigel B Butler Ltd. has you covered. We offer various services, from handling bookkeeping and accounting to completing tax returns and even assisting you in growing your business. Contact our team today for further information.

Choosing a Service

Choosing an accountant that matches your needs

What Our Clients Say

Read the reviews from some of our satisfied clients


Free Initial Consultation

Understanding your accountancy requirements

Request a Callback

Lets talk at a more convenient time for you

Understanding your accountancy requirements

Arrange a free consultation

We’re a dedicated team which strives to provide success to our clients in regards to all their accountancy needs.

Meet our team