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May / 18 / 2018

GDPR: What is it all about? The European Union’s General Data Protection Regulation (GDPR) officially comes into effect on May 25, 2018. The compliance deadline which was a long time coming is now only 1 short week away, and even in the final days, the affected portion of the business ...


Dec / 13 / 2017

The way payments are made nowadays is radically changing. People are using all kinds of devices (e.g. via smartphones and tablets) to shop, pay the rent, book a trip or make any other types of transactions. Thousands of companies are competing and cooperating at the same time to enable and simplify the flow of transactions and the transfer of related information from one party to another. Players combine forces to facilitate the “ready-to-use payment system” as we know it nowadays. In their 2016 Payments Ecosystem report BI Intelligence drills even further into the payments industry to explain how a broad range of transactions are processed. According to the report, 2016 was a breakpoint year for the industry – payments companies improved securities, expanded their mobile offerings and accredited more digital purchases than ever before. Additionally, it is noted that the industry leverages alternative technologies. This new, developing sector could disrupt the processing ecosystem. Devices ranging from refrigerators to smart watches now feature payment capabilities, which will bring changes in consumer payment behavior. Global payments revenues for 2016 have been growing at rates in excess of expectations according to McKinsey & Company’s most recent research. According to the forecast, tempered but still healthy revenue growth of 6% annually is expected through 2019. Transaction-to-digital brought a period of rapid transformation for the payments industry. Payments used to be a simple one-on-one transaction. Today, however, the payments ecosystem has evolved into a complex global machine. This world of global payment processing now includes card networks, gateways, acquirers, processors, ISOs/MSPs and more. To understand the full picture one must be familiar with all these players. So let’s break them down and go through each one briefly: Acquirers are typically banks that work with merchants to allow them to accept payments. In order to do so they provide them with paying terminals, processing services and a bank account where the incoming funds would be deposited. Processors are responsible primarily for data transmission and security. Sometimes acquirers and processors could be referred to as the same thing – such as acquirers like Chase Paymentech who process their transactions in-house.Other acquirers hire processing companies to handle transactions. There are 2 types of processors in the card payment system. Front-end processors which make sure the customer has enough funds to make the purchase and back-end processors which are responsible for the settlement of the funds. Issuing banks, or issuers, provide consumers and businesses with debit and credit cards connected to checking or credit accounts. They could also be the merchant’s acquiring bank. Card networks represented largely by Visa and MasterCard have the functions of routing transactions between issuers and acquirers and setting the rules by which everyone operates in the market. Card networks set the interchange fees charged by issuing banks and resolve disputes between different parties.Other players in the industry are the Independent Sales Organizations (ISOs) and Merchant Service Providers (MSPs). They act as intermediaries between merchants and acquirers/processors so that the banks don’t have to sell their services to millions of merchants. ISOs and MSPs sell payment-services including payment terminals. They function as a customer service that the merchant can contact if needed. There is no significant difference between an ISO and an MSP; MSPs are registered with MasterCard, whereas ISOs are registered with Visa. Both businesses are being affected by the mobile point-of-sale (mPOS) where new mPOS devices are a lot cheaper than traditional POS devices.While ISOs and MSPs could service the old devices in the past, this is not the case with new ones where they could be replaced for insignificant cost in case of a functional problem. Payment gateway businesses are specific to e-commerce companies, serving essentially as the online version of a payment terminal and a processor for online businesses. Gateways primarily act as the portal through which e-commerce merchants connect to acquirers but they also provide added services like analytics and reporting for their merchants. As the number of mobile usage increases and merchants are taking their businesses online gateway providers expand with some outstanding examples of more than a 100% YoY growth according to BI Intelligence Payments Ecosystem report. This trend seems to be continuing with a fast pace as we see online purchasing increasing every year. The payment transaction is the foundational process that the payments industry is built on. To understand how a card transaction is managed we have to look into the three stages of payment-card processing: Authorization – the process of transaction data going to an acquiring bank, which then sends an authorization request to the customer’s issuing bank. the issuing bank sends an authorization code through the card network to the acquirer, which sends it back to the merchant to complete the transaction (if no issues are found, such as lack of funds). Batching and Clearing – at this point the purchase is complete but the merchant is still waiting for payment. The aggregation of all the day's transactions, goes to the acquirer, which then requests payment on the merchant's behalf from the necessary card networks. These networks then send requests for funds to the appropriate issuing bank. Funding – the stage when the issuing bank sends the funds to the acquirer through the card network, minus a small interchange fee. The card network also takes a minuscule assessment fee and transfers the funds to the acquirer, which finishes the clearing process. Payment Processing Services Services previously provided by banks are now covered by the new Fintech companies such as PayPal, Stripe, Klarna and others, serving as a Payment gateway business. Getaways are specific to eCommerce companies, where they serve as the online version of a payment terminal and a front-end processor for online businesses. Gateways act as connector between the eCommerce merchants and the acquiring bank. Such services started playing a more significant role in the payments ecosystem as more and more merchants are building an online presence. For instance, when the customer is buying online, at the moment of payment he or she will be required to pay via Stripe, where Stripe is the component allowing: the client to select their method of payment and card type collect client’s money; at the end of the day, bundle all the transactions that take place over the course of a day and send it to the acquirer transfer money back to the merchant with all interchange fees calculated Companies like Ingenico, for instance, are very strong at this type of services. Their Payment Processing Services are based on a Payment Processing Platform. To Connect to this Platform, they provide different web-based and mobile interfaces depending on client’s needs. To transact on the Platform, they provide a number of processing services. This way they deliver a wide variety of international payment options to their customers, as well as access to a broad range of card acquiring and alternative payment products. By developing this component, companies in the field can accommodate any type of payment: Bank payments, direct debits, Visa, Mastercard, e-wallets like PayPal, MobilePay, etc. This sector, covering Money Services Businesses (MSBs) comes with heavy transaction volumes that utilize a complex, global banking partner network. Timeliness of insight into the lifecycle of the payment and its settlement has implications for scalable operations as well as the level of service to the customer and their payee. Deployment of a robust reconciliation solution is critical to supplying operational insight and delivery, as well as providing needed financial control. Processes we reconcile in the Payments industry: It is common for organizations in the Payment Processing sector to split their transactions to guaranteed payments and unguaranteed payments. Guaranteed Payments – A scenario where a client wants to buy goods from an online store. In order to make the purchase, they would have to insert a valid card number. At that point the payment processing component will check with the customer’s issuing bank which holds the customer's deposits or credit associated with their account. If the designated amount is present, the platform would block it and only then it will continue with the client’s purchase. That way merchants can rest assured that they will receive a payment.At month end the business’ internal records have to match to what is being recorded by the Gateway system. The reconciliation is essential to ensuring that internal records are correct and correspond to the external report. To facilitate these needs ReconArt has the capability to accept a rich variety of file formats, and to manipulate and normalize data source records. External data can be enriched to mirror internal records, and multiple external data sources can be reconciled together against internal data. Unguaranteed Payments – A situation when a customer is purchasing a product online and the website issues a payment order that has to be paid in a bank. In such case there are no guarantees if the payment will be made or not.When an order comes in the internal system it will stay there to indicate that a payment is expected. The payment may be settled in few hours, few days or longer; wrong amount of money can be transferred; or wrong preferences can be placed. Incoming electronic payments may have limited client or invoice information.Recognizing client credits and applying payments to outstanding accounts may be difficult and time consuming. In ReconArt meaningful data from any number of systems can be brought in as reference data and stored in lookup tables which can be used to enrich and update the data. Automation of payment posting and reconciliation allows a business to accurately and automatically post and mark invoices as paid based on specific business priorities and rules. Outstanding items resolution can be optimized by configuring aging reports and notifications. Fees. If we have a $100 transaction made by the client, by the end of the process the merchant would receive $98 of them because of fees; Once the issuing bank receives a request for funds it sends the requested amount back to the acquirer via a card network, minus an interchange fee of about $1.75. The card network takes out an additional small fee as an assessment fee and passes the funds to the acquirer, which completes the clearing process. In the final stage, the acquirer subtracts a discount fee and deposits the remaining amount in the merchant's account.Payment processing platforms are a big help in such cases with the capability to bundle all the transactions for the day, subtract all necessary fees and pure the amount into the merchants account.As a next step comes the reconciliation process which can automatically check if the total amount for the day represents the amount of all the individual transactions for that same period of time. ReconArt allows for automated recognition of Bank and other Fees and related Journal Entries. With the ability to logically tie, group and match items from different data sets, ReconArt can automatically execute complex business rules, as well as identify exception items and flag them with user-defined codes. Variance items. When, for example, a customer wants to pay in RUB but the merchant doesn’t have a Rubles account – the payment would be converted to another currency which the merchant can accept. Discrepancies can appear because of the different currency of the settlement. If, for example, the merchant has three destination currencies (e.g. accounts in GBP, EUR and USD) then no matter in what currency the customer is willing to pay, the merchant will receive the payment in one of the destination currencies. This has to be taken into consideration, as companies usually have their algorithms for the different currencies which should be bundled together to achieve the best conversion results. In ReconArt this is accomplished by creating sophisticated rules where business can predefine criteria on which the system will aggregate the transactions together. ReconArt includes functionality which enables business users to automatically enrich data based on a variety of factors, including exchange rate (FX rates are fully supported within the system), country of origin, and source currency. This can be then placed as secondary criteria after the settlement date, which is typically used as primary criteria. Once ReconArt has aggregated all these together it waits for the bank statement to flow in. Once that’s loaded into the system, ReconArt does the reconciliation and displays all the differences, profit and loss from the exchange rates. Chargebacks. A widespread practice in the eCommerce business is the situation where a customer buys clothes or other goods but then decides to turn it back or cancel the order. So, apart from payments, other processes to keep in mind during reconciliation are refunds and cancelations.That makes generating reports (for example, chargeback reports) a common practice in the eCommerce field. ReconArt can easily and automatically generate reports based on predefined logic, and automatically send them to relevant internal or external parties. How are we helping the industry ReconArt is particularly attuned to the requirements of the Payment Services industry. Our wide experience in the space ensures that the needs of our Payment Services clients are well-supported by broad range of capabilities. To include: Automated sourcing of bank and other financial account activity data. Fully supported financial institutions and service providers across the globe, including thousands of banking institutions, credit/debit card providers, and others. Experience with almost every Gateway system like Stripe, Adyen, PayPal, Sage, Klarna, etc. Automated mapping and onboarding of bank statement data. Major banks in Europe and US covered via direct import of SWIFT file formats (and camt. in Europe). Processing orders from internal systems, automatically imported in a CSV, Excel or other format. Automated matching of bank statement activity and of incoming client credits to outstanding client obligations, including complex business rules. Multi-currency capabilities. Recognition of Bank Fees and related Journal Entries. What our clients are saying “Ease of use was a big reason why we selected ReconArt™. As accounting and finance people, we are big Excel users and we found that the import, match rules, and other related functions in ReconArt™ allowed us to leverage already existing skills. As business users, we could really relate to the logic of the system.” – Kerry McGovern, Director of Treasury at Viewpost® References: 1. http://www.businessinsider.com/the-payments-industry-explained-2014-122. http://www.mckinsey.com/industries/financial-services/our-insights/how-the-payments-industry-is-being-disrupted ...

Aug / 7 / 2017

As designers of a world-class enterprise system, ReconArt has always had significant focus on application security. We have purposefully integrated enterprise security best practices in the application to keep access and data secured, while simultaneously keeping configuration and management as simple as possible. To achieve this capability, our application implements several methods for application security which allow integration in most common security infrastructures. These capabilities are designed following best practices for password management which are often required to meet corporate and statutory security policy (often subject to audit). Stand-alone Security Standalone security method stores user logins and passwords in encrypted format within the ReconArt system. Administrators of ReconArt can configure enhanced password policy through parameters like password expiration, minimum password length, password complexity, number of unsuccessful logins, password history, password lockout, and number of password changes before a password can be reused. . If a user needs to be updated, disabled, or his password needs to be reset, the ReconArt administrator will act in the ReconArt application itself. Audit of accesses and permissions granted are also stored in ReconArt and can be retrieved for review. Integrated and Enterprise Security Even though standalone security provides a secure method of handling passwords and managing user access to the application, it has one drawback. Users need to set and keep yet another login and password to work with the system - another parallel user that is only logically tied to the unique individual. This is a drawback owing to manual coordination in each application and its inherent redundancy. To address this problem, a single repository that centralizes identity management and related storage are available. This provides a single source of management and authorization for the software estate and serves as a major component for enterprise-level security. ReconArt provides alternatives that allow integration with such repositories, such as Microsoft Active Directory (AD) and cloud-based Identity and Access Management (IAM) solutions. For in-house deployments that use Microsoft Windows infrastructure, ReconArt provides functionality for integration with the Active Directory (AD). In this case, users authenticate in ReconArt with their AD usernames and passwords. ReconArt will redirect the authentication to the AD and will let the user access ReconArt after receiving confirmation from the AD that the credentials were correct. Additionally, Single Sign On is also available. In this case, after logging into Windows workstation and authenticating in the AD, users can login directly to ReconArt without undergoing a second login challenge. Password policy and management (reset passwords, user deactivation) is done by the administrators in the AD. The configured changes are replicated to ReconArt automatically. As noted, the benefit of such configuration is that Active Directory becomes the central point for management and auditing of the access for the users in the enterprise. Security Integration with the Cloud With the development of cloud-based platforms, hybrid configurations have become more common. They require a different approach to security to integrate the external cloud-based applications with in-house applications (and often Active Directory). ReconArt makes accommodation for security integration in cloud-based and hybrid configurations (configurations where some of the systems are deployed in-house and others in the cloud). We implement connectors for ReconArt to work with leading cloud-based Identity and Access Management solutions (such as Okta). With such integration, users can login with their enterprise username and password and login to the any connected system automatically after being authenticated once. Again, password policy can be centrally managed by the administrator for all the applications in the enterprise (in-house or cloud-based) and adhere to a common policy which ReconArt will observe. Users can use password reset self-service functionality provided by the Identity and Access Management solution to manage their access. Of course, the new password will need to be compliant to the password policy that is enforced by the IAM solution. Common Enterprise Security Integrations ReconArt is agnostic regarding IAM solutions and supports any SAMLv2 compliant identity provider. Popular integrations that customers use include Okta, OneLogin and Shibboleth – all of which provide for the functionality described in this article. Referenced solutions *: Shibboleth : https://shibboleth.net/ Shibboleth is among the world's most widely deployed federated identity solutions, connecting users to applications both within and between organizations. Every software component of the Shibboleth system is free and open source. Okta : https://www.okta.com/ Okta is the leading independent provider of identity for the enterprise. The Okta Identity Cloud connects and protects employees of many of the world's largest enterprises. It also securely connects enterprises to their partners, suppliers and customers. With deep integrations to over 5,000 apps, the Okta Identity Cloud enables simple and secure access from any device. OneLogin : https://www.onelogin.com/ OneLogin is a cloud-based Identity and Access Management (IAM) provider for the modern enterprise, with an industry-leading SSO and identity-management solution. Over 2,000 enterprise customers trust OneLogin to secure and manage identities in cloud, legacy and hybrid environments. * Information about Shibboleth, Okta and OneLogin as provided on their websites and Linkedin pages. The ReconArt Security Advantage Integrating ReconArt with an Identity and Access Management solution provides the following benefits: Improved security – Control security for ReconArt as part of the cloud-based solution infrastructure and manage security from a central point. Use Multifactor authentication for enhanced security and access control. Security Policy Enforcement – ReconArt access will be compliant with the security policy of the company and managed by the central repository (either the AD or IAM solution) Compliance Tracking/Auditing – All access management and access reporting are centralized in a single application Easy Integration – Does not require complex configuration. Usually ReconArt can be integrated with any of the supported IAM solutions in less than an hour using configuration parameters solely Affordable – ReconArt believes enterprise class security should be provided to everybody who is using our system. For this reason, we deliver integrations with Identity and Access Management solutions at no extra cost. They are included as part of your ReconArt license and do not require any extra licensing, upgrades or additional payment. Just configure it and use it! ...

Feb / 14 / 2017

The travel industry is one of today’s most exciting and rapidly growing business sectors. Web-based companies like Expedia, Booking.com and Hotels.com have made booking and buying travel easier than ever before. For travel companies, 2016 was an exciting year with dynamic changes, aggressive growth, and continuous success. To put it simply, travel is on the rise globally. Based on the 2016 TripAdvisor TripBarometer survey, 1 in 3 travelers spent more on travel this past year than in 2015. According to Skift Magazine, a majority of online travel booking from the U.S. and Europe is largely provided by the two giants: Priceline and Expedia, with some additional coverage by TripAdvisor and Google. Currently, several prominent trends are heavily influencing the success of the global travel industry, from major changes in travel marketing to how consumer data is now being used to understand the modern traveler. Mergers, killer brands, globalization and the continuing expansion of Airbnb and similar companies have kept 2016 interesting and have prepared the industry for the next step in its evolution. Travel data – the conglomeration of booking, discount, and commission transactions – plays an enormous part in the ever-evolving challenges around customer experience, market expectations, and accurate financial reporting. In order to ensure the integrity of the transaction lifecycle and comply with best accounting and financial practices, as well as decrease security risk, travel data has to be carefully maintained and reconciled. According to latest research by eNett, manual payments and reconciliation cost the travel industry over $1.5 billion per year. A survey sponsored by Carlson Wagonlit Travel (CWT) shows that travel reconcilers are not convinced they have a complete or accurate picture of the total cost of individual trips, which is concerning for such a highly-competitive industry. Accounting and Operations teams struggle to reconcile data, dedicating a huge amount of staff time and spend per year in manual reconciliation and exception investigation. Travel reconcilers typically face challenges in their work having to compare multiple data sources. Additionally, differences in reports due to data formatting can greatly complicate the process. Working with numerous partners can introduce more complexity as standard processes and formats are rarely used. Let us take you on a brief journey of what makes the travel industry different, challenging, and fascinating to work with from a reconciliation perspective. Part of the industry-specific complexity is that in today’s world, many travel companies serve as mediators between clients and other entities dealing with accommodation, travel plans or vehicle rental. It is commonplace for clients to reserve a hotel room, rent a car, reserve a parking space, buy train tickets or travel insurance after booking their flight tickets via the very same website. Booking websites work as an aggregator for all the services the customer wishes to purchase and a single booking can be a combination of multiple sub-bookings. But that isn’t the only obstacle. Very often, there is a specific payment method for every type of service – let’s take a hotel stay as an example. Whereas payments for airline tickets are processed almost immediately, hotel bookings are usually billed after the client completes their stay. Reconciliation is essential in such cases for travel companies to be able to track whether the services declared were actually used and whether they owe a payment to the corresponding party. By comparing the bookings from internal systems against the invoices that hotels would send every month, travel companies can easily define whether transactions match as expected or there is an underpayment/overcharge. As with any other industry, errors can happen – customer billing records do not always match customer services records, meaning that some customers are billed for items they have not ordered while others erroneously escape being charged for services they used. The same can happen at the company level – partners can send overcharged invoices by mistake or forget to submit a bill for a customer’s visit, resulting in missing invoices. There are other situations where the expected billing does not equal to the actual one. For these reasons, reconciliation is a necessity in the travel industry to ensure process integrity, a strongly positive customer experience, and financial accuracy. Considering the large number of transactions processed, even small differences can accumulate to significant amounts during a single month. To address these challenges, ReconArt brings value to major players in the Travel, Hospitality, and Leisure market. These volume-heavy businesses can experience the full benefit of the ReconArt solution by replacing out-of-date and frequently resource-intensive processes. ReconArt’s cloud-based reconciliation solution lends itself perfectly to the transaction-heavy characteristics of the travel industry. For example, it is common for travel companies to receive invoices from many different parties in many different file formats, making a comparison to internal sources almost impossible. ReconArt’s powerful import functionality allows for standardization of data format on import. This allows for common business logic to be applied for the transaction type across vendors, partners and both internal and external systems. Using ReconArt’s drag-and-drop interface and Excel-like capabilities, integration between systems is greatly simplified. This allows business users to easily perform setup configuration. ReconArt provides a rich set of tools in its Integration module that make it easy to map, normalize, transform and enrich data, ultimately providing painless data flow into and out of the solution. Once the data is normalized, ReconArt’s automated solution is ready to match and identify the exceptions. By using the unique reference number that is generated at every booking as matching criteria, ReconArt’s automated reconciliation helps to reduce erroneous payments and improve visibility of exception items. With the powerful and high-speed matching engine, ReconArt can efficiently and accurately isolate exceptions in high volume accounts. As part of this process, exceptions can be automatically classified using the matching rules defined by the business users. Additionally, the matching engine supports multi-sided reconciliation, complex match rules, and one to many and many to many matching relationships. The setup of matching logic is made intuitive and efficient and is used for reconciling all segments of the industry - commission processing, high-volume matching for bookings, vendor services, etc. At the end of the day, users are simply presented with the results of the matching which enables them to easily see whether there are any exception items (such as underpayments or overcharges). Matched invoices can be exported and sent directly to the company’s accounting system for releasing the payments and if a partner has sent an invoice for $105 instead of an expected $100 for example, ReconArt can automatically generate the credit note and transfer it to the accounting system for further processing. Does your business receive invoices from tens or hundreds of separate partners (e.g. airlines, hotels, etc.) with small differences due to exchange rates and credit card fees? Not a problem – a unique feature of ReconArt is its capability of matching high volumes of transactions with dynamic variances. The dynamic variance allows for defining specific variance tolerance for an indefinite number of providers all in a single matching rule. Travel, Hospitality and Leisure is one of our fastest growing industries, as our client base now includes agencies around the globe. The built-in flexibility and our experience in travel industry related reconciliations allow ReconArt to serve the reconciliation needs of any size business. In fact, ReconArt continues to enhance its solution and features in partnership with travel companies of all sizes. In this manner, we continually improve our automated reconciliation solution in ways that best service the industry. What our Clients are saying: “ReconArt provides a great way of holding the data until we are billed, however far in the future it may be since the original booking.” “Super users or system users without IT knowledge are able to setup and to make changes in the system.” “The available complexity of the matching rules is perfect for us, as it means we have super-tight controls over what we accept to pay from suppliers, which is very important to us; if we didn't have this capability we would end up over paying suppliers by thousands probably.” “It is amazing how easy it is to setup the system and to make changes if suddenly business needs change. The change of file formats from suppliers has been a big issue in travel companies the last few years.” We invite you to explore the many ways we can support success in your environment. Do you want to learn more about reconciliation software for the travel industry? Contact us today. References: 2016 TripAdvisor TripBarometer survey - https://www.tripadvisor.com/TripAdvisorInsights/n2670/6-key-travel-trends-2016 Skift Magazine, Issue 3: The Megatrends Defining Travel in 2016 - https://trends.skift.com/yearbook/megatrends-2016-magazine/ eNett: When will the fintech revolution reach b2b payments - https://www.enett.com/when-will-the-fintech-revolution-reach-b2b-payments Study Finds Corporate Travel Managers Waste Over 400,000 Hours Reconciling Travel Data - http://www.gbta.org/foundation/pressreleases/Pages/rls_071712.aspx...

Jul / 6 / 2016

Employee expense management is better than ever, but full control over the process requires reconciliation, too. Employee expenses, or the costs related with tasks performed by an employee for an employer, are nothing new in the business world. These common expenses are employee-generated transactions associated with business travel, accommodation and meals, phone/Internet services, office supplies, and more. In the past, employees would cover these costs upfront and itemize them later, along with providing paper receipts, which were captured and submitted in physical folders - later keyed into Microsoft Excel - processed by accounting and reimbursed back to the employee. Today, such items can be captured by a smartphone app developed specifically for this process, flow digitally into the accounting platform and are often paid directly by the employee using a company-issued credit card. So expense funding, tracking and submission has really come a long way in the last few years. Many of the advancements in supporting the expense process have been driven by the confluence of regulation and technology. Let’s talk about what has been going on in the world of employee expenses and why reconciliation is now a crucial piece of this important corner of Finance. There are specific laws on the subject. IRS Revenue Ruling 2006-56 has slowly been adapted by businesses as a best practice over the past decade. The ruling requires employers to track the amount of expense reimbursement allowances paid to employees on a per diem basis. Usually, employee expenses are not subject to income tax or employment tax but this exclusion only applies up to the federal per diem rate limit. If an employer pays expense allowances that exceed this limit, the excess amounts are subject to income tax and employment tax – unless ALL the expenses are substantiated by the employee. What this means in reality is that employers must have a clear reimbursement policy and provide employees with the appropriate tools and workflow to substantiate all their expenses in a timely way. There is an array of great tools out there for this process. Accelerated by this ruling, and because as a component Finance, employee expenses are subject to all the recent SaaS technology advancements, there are now dozens of great expense tracking systems have been on the rise. Concur, Expensify, Coupa, and many other web-based applications are now available to help improve the process of employee expense tracking, approval, and reimbursement. Audit gaps. As Tax Columnist Eva Rosenberg writes, this is still a process that is difficult to manage because employees who generate high per-diem expenses are often traveling intensively and have a difficult time keeping track of expenses and reporting them in a timely manner – even with the existing systems in place. This reality often leaves chunks of expenses unpaid for long periods of time, making it difficult to dig into transaction origin and legitimacy, once expense reports are actually provided. Great – so there are laws and guidelines in place that provide the structure of how employee expenses should be reported by employees and handled by employers. Due to this need, there are many great systems out there that can help with this process, some of which integrate with standard ERPs to help categorize and book expenses to the GL. One aspect of this process has been lagging, however, and has not benefited broadly by technological and operational improvements provided by expense management solutions. This involves the area of reconciliation: tying the transaction cash expense to a legitimate business expense. How do you validate the transactional integrity of this whole process? How do you know that a claimed transaction truly debited? How do you identify an erroneous or fraudulent transaction? This is where reconciliation, and, specifically, reconciliation software, comes in. Bringing in the ‘other side’ – meaning the actual transactions that ‘hit’ the corporate credit card or bank account statement, means that you fully validate this entire process and can attest to its accuracy on the balance sheet and in front of an auditor. ReconArt reconciliation software perfectly complements the best practices in employee expense management by providing the specific linkage and closing the loop on the transaction. The ReconArt advantage: Works with any ERP, accounting, or expense reporting system. Automatically imports your data with a flexible Import tool, at your desired frequency. Automatically on-boards your merchant or bank statement expense data. Automatically matches your multiple-source data on any criteria and in any way (1 to 1, 1 to many, many to many, etc.). Allows business users to collaborate on exception investigation or resolution. Automatically exports your transaction reconciliation results for reporting or integration with other systems. Enhances overall control and visibility. Records everything in a clear audit trail. Coca Cola Bottling Co. Consolidated (CCBCC) is a recent success story. CCBCC successfully deployed the ReconArt solution in a matter of weeks to automate and improve their expense reconciliation process. The organization had three data sources at play: JP Morgan credit card transactions, Concur for expenses control, and SAP as the system of record. Owing to rapid growth, this particular process was becoming a pain point. Exceptions were growing increasingly difficult to identify and investigate and the process was demanding a huge amount of time from the team. ReconArt's reconciliation software allowed them to avoid this pain point as well as ensure timely tying of cash expense to legitimate business activity and its accounting. Feeling the pain of expense transaction reconciliation too? Contact us to discuss how ReconArt can be quickly deployed and implemented in your environment. Read More: IRS Revenue Ruling 2006-56 https://www.irs.gov/uac/irs-provides-guidance-on-per-diem-expense-reimbursements-paid-by-employers “The Evolution of Expenses: A Timeline of Expense Reporting Techniques” by Kelsey Cox http://www.business2community.com/infographics/evolution-expenses-timeline-expense-reporting-techniques-0893041#q3vjie7BGFuAZqkR.97 “Don’t be audit bait when deducting job expenses” by Eva Rosenberg http://www.marketwatch.com/story/dont-be-audit-bait-when-deducting-job-expenses-2011-02-18...

Feb / 23 / 2016

Self-sufficiency, the ability to supply one’s own needs without external assistance, is essential for any business team which strives to maintain control of its operations, without being overly dependent on external parties. This is especially true for businesses that have to process a large volume of transactions from multiple internal and external accounts. When a business reaches such levels of operation, identifying high-risk or non-standard transactions is crucial to enhancing compliance and speeding-up period end activities. However, with so many parties and procedures involved, how do business teams make the reconciliation process more self-sufficient? When it comes to matching, reconciling, and certifying accounts, ReconArt’s customer success stories illustrate a number of challenges businesses from various industries face throughout their reconciliation lifecycle: Dependency on internal IT Departments to achieve specific tasks Heavy reliance on Excel and “spreadsheet gurus” Large amounts of manual work Expensive and rigid legacy solutions. All of these challenges affect a company’s ability to address its needs without external assistance. However, they also open the door for business teams and leaders to reimagine how automation could transform the operation - changing what now takes days or weeks of manual labor and dependency on other departments, into an agile workflow with well-defined roles, responsibilities, and outcomes. Generally, reconciling financial data is contingent upon the frequent collaboration between business teams - who have knowledge of the business’ reconciliation process - and internal IT structures who have the technical capabilities to implement that knowledge. This dependency makes it difficult to have visibility and control over the reconciliation process. By reducing reliance on outside departments, business teams become empowered to manage tasks and delegate responsibilities with more transparency and visibility. For example, ReconArt users can generate, distribute, and archive a rich variety of reports that fit their exact specifications. When it comes to analytics, ReconArt’s dynamic dashboards give users a comprehensive overview of reconciliation and certification status. The platform’s journal entries, notifications and prompts, and task templates ensure that users can define and control their workflows. Role-based administration makes it easy to accommodate internal and external auditors with minimal disruption to business operations. Giving control to business users, however, is only half of the story. Even without external assistance, companies might still find it difficult to fulfill their reconciliation needs. Instead of an optimized and automated workflow, the reconciliation process can quickly turn into a collection of separate laborious activities. This might include obtaining the right internal data, relying on other staff to extract large data sets while manipulating them to adhere to specific formats, to then delivering the data to systems, stakeholders and/or regulatory bodies. Therefore, a self-sufficient reconciliation solution not only gives control to business users but is capable of fully integrating with the entire reconciliation process from start to finish - thus maintaining control and responsibility. By providing native support for common data formats, a drag-and-drop interface, and easy automation processes, ReconArt allows users to tackle just about any part of the reconciliation lifecycle. Hence, the level of control is given to business users in terms of reporting, analytics, and task management is complimented with the most advanced matching, exception management, and automated reconciliation solution tools in the market. Flexible Needs Require Flexible Solutions Since company needs constantly evolve, achieving self-sufficiency becomes a matter of practice and continuous reevaluation of processes. As a trend, many organizations are moving toward Software-as-a-Service (cloud-based) solutions. This approach eliminates common problems found in IT-centered, self-hosted environments, and provides a service that is agile, cost-effective, and scalable. Removing dependencies on internal IT resources makes it much easier for business teams to address existing problems, preempt future ones, and maintain full control of all day-to-day reconciliation operations and needs. When users learn to use ReconArt, they often expand its scope in the business across other existing and new processes (e.g. adding a new bank record, deciding to reconcile employee expenses, adding month-end certification in addition to daily matching activities, etc.). This example illustrates a new level of empowerment and value creation that employees are able to bring to the table once they are fully equipped to own their business processes. Today, reconciliation software solutions can provide companies with tight control and the necessary capabilities to fulfill their business needs with minimal external assistance. By implementing these solutions, companies create self-sufficient processes, as well as self-sufficient employees who - instead of being bogged down by tedious tasks and departmental obstacles - take full control of their work and enjoy the efficiency, accuracy, and transparency provided by top reconciliation software and financial close management tools....

Oct / 14 / 2015

These days it seems like we are receiving more and more requests to help with the automation and streamlining of credit card reconciliation. As a platform historically rooted in principles such as the ability to handle large data volumes, various and complex data sources, and multi-step matching scenarios, ReconArt™ is perfectly suited to answer this call. E-commerce and Retail are among the first industries that come to mind when discussing this process – but nowadays, they are hardly the only ones that might be ‘drowning’ in credit card transactions coming in from various sources such as card-specific statements (VISA/MC, AMEX, etc.), online payment platforms (PayPal, ProPay, Cybersource, Amazon Payments, etc.), shopping cart solutions (Magento, Opencart, etc.), sales tax solutions (such as Avalara), and other consolidated merchant bank providers. The travel and hospitality industry with their bookings, non-profits with their donations, benefits administrators with their payment management, technology providers with their subscriptions – this is everywhere. And when we also count corporate credit card, or employee expenses, it’s hard to imagine any organization that can’t benefit from a solution engineered to handle the range and scale of these reconciliations comprehensively. Here are some of the most common challenges we hear about: Multiple data sources. Juggling different data formats, different cutoff times, and different pieces of information associated with card-based processes can be very challenging. Some organization still struggle by downloading various statements and reports and ‘massaging’ them in Excel for hours before even being able to compare them. ReconArt™ allows users to easily configure and automate their data source imports, so that their available data is already imported, normalized and matched by the time they start their day. Batched items. It can be nearly impossible to connect batched sums to detail level transactions. As many organizations can’t keep up with daily manual reconciliation, the process gets put off to month-end. By that time, there are hundreds of transactions to sift through, making the effort even more overwhelming. In ReconArt™, users can create automated match rules that can be as simple or as complex as needed, ensuring that they don’t waste precious time on ticking and tying matching items. Additionally, when the automation capabilities of ReconArt™ are leveraged, the organization can move toward daily or near continuous reconciliation of their card-based transactions. Timing issues & Exceptions. At any given point in time, it’s impossible to distinguish simple timing delays, which will naturally get resolved in a day or two, from real problems. There is never any real visibility into what is truly outstanding. The ReconArt solution allows for outstanding items to be categorized automatically, which empowers users to collaborate and investigate only the items that they need to spend time on – ultimately resolving them completely. ReconArt™’s ability to set the right focus for investigations and exceptions means priority and risk can be managed better and with more visibility. Growing volumes. With all the above at play, transaction growth can compound problems. Reluctant to add more headcount for manual reconciliation efforts, many organizations simply lose control over this process and become swallowed up in this necessary but tedious work. Multi-step processes. It’s rare that all you need to do is compare list A to list B – and that’s it. Reconcilers need to be able to interact comprehensively with their data: labeling and investigating exceptions, conducting research, generating reports, looking at trends, creating and approving journal entries, posting information in other systems of record. ReconArt™ accommodates all of the above in one fully auditable platform. But let’s take a step back. The classic example for this type of reconciliation involves a transactional comparison between credit card activity (in the form of bank activity and/or additional credit card statements) and what the company’s books show regarding credit card sales. Sounds pretty straight-forward on the surface. If you dissect the transactional flow of just a handful of organizations, however, you will find that there is actually a lot of variety (and potential complexity) in how organizations handle their credit card matching. This is due to the various business processes, workflows, systems of record, and data sources involved. Here are some common needs we come across: A simple comparison between credit card statements and the GL. Same as above, with an additional check against the bank . A simultaneous comparison between credit card activity and two internal systems, such as a GL and employee expense reports, for example. A 2-step comparison between an invoice system (that is separate to the GL/ERP) and the online payment platform (let’s say PayPal), with a subsequent comparison of the matched items coming out of that process to a sales tax software; followed by posting into the GL from ReconArt™. So there actually isn’t one typical credit card reconciliation method – because all of the above scenarios reflect completely different business processes. This opens up some great conversations on our initial Discovery/Demo calls with prospective new users. Interestingly, more than any other transactional reconciliation process, credit cards often present transactional flow situations that on the surface can be perceived as a 3-way-match or multi-way match. This is because, at the end of the day, it seems like what we want is for all systems involved to reflect the same thing. Our tools are well suited to "many-legged" reconciliation and to giving insight into a transaction’s lifecycle. The competitive advantages that the ReconArt™ solution offers are extremely applicable to credit card recs – proven ability to work with all the typical data sources, handling huge transaction volumes, providing integrated exception management, leveraging automation throughout, all while allowing for easy, intuitive administration and everyday business use. Without a doubt, credit card reconciliations have joined the ranks of some of the most interesting processes ReconArt™ deals with, and it is certainly one that is affecting a rapidly growing number of organizations. Having already leveraged best-practice reconciliation technology and strong automation; we welcome every opportunity to be the best long-term solution for this widespread business need. ...

Sep / 30 / 2015

Although it has been touted for many years as a pending revolution in how IT and business services are delivered, only recently has “the cloud” been embraced broadly as part of business strategy. Initially, adoption of Software-as-a-Service (SaaS) was focused on front office functions such as sales, marketing, and customer service (e.g. SalesForce CRM and Zendesk). The adoption of such solutions represented the first wave of meaningful transition to the cloud. We are now seeing a second wave of transition that further realizes the full promise of “the cloud” touted many years ago. This new wave embraces the benefits of SaaS by driving it deeper into the organization and leveraging it to fuel transformation and strategy. As most business strategy revolves around growth, it is interesting to note that many of the fastest growing firms are either adopters of SaaS or are providers of SaaS solutions. The former is a testament to the effectiveness that leveraging SaaS offers. The latter is a testament to the rate of adoption SaaS solutions enjoy. As the benefits are substantial, I thought it useful to review how SaaS supports the organization striving for growth. These benefits fall into three primary categories: agility, cost, and scalability. Agility When software solutions are hosted in-house, businesses have to build costly IT infrastructures (both systems and people) to provide for their functionality. This involves IT specialists to develop, test, host and maintain the applications as well as procuring requisite hardware. The process of acquiring gear and developing and configuring software is very time-consuming and even distracting. To compound matters, such in-house infrastructures are inflexible and difficult to change. For organizations using the in-house model, this can be a major pain point. Often in these circumstances, the focus shifts to the difficulties involved in developing systems (as opposed to solving business problems) and we lose site of the end goal: supporting the core operation of the organization. This is a major blow to both agility and momentum for an organization seeking rapid, value-generating change. By contrast, software solutions offered via the cloud avoid the problems of the traditional, on-premise approach. In the SaaS model, the solution vendor provides the infrastructure and resources necessary to support the application and its evolution. The dependency on an IT-centric solution is avoided. As a result of supporting varied needs of the SaaS customer, the successful SaaS vendor provides a flexible, customizable solution based on common functionality and best practices, delivered in a multi-tenant model. Again, the vendor assumes responsibility for flexibility and cost-to-change. This all lends itself to a solution that is rapid to deploy, easy to upgrade, and is flexible to support the organization and its changing needs. Ideally, the SaaS solution can be 100% business-owned while avoiding the involvement and resource constraints of IT departments. The web-based nature of cloud solutions means the application is available anywhere at any time. This is helpful when there is a need to offer the application globally either as a part of re-homing the functionality or spreading the functionality across a geographically diverse organization. The ability to access the functionality to this extent could be quite expensive in traditionally in-house environments. Owing to the ubiquity of web applications, SaaS solutions benefit from very high adoption rates. Today more than ever the best of them typically have very intuitive user experiences and reduced learning curves. Those factors dramatically improve adoption and successful change in business process. Finally, the agility inherent to SaaS solutions benefits the solution evaluation process. Both the key business functionality and solution agility can be quickly proven with rapid prototyping and proofs-of-concept (POC). Cost SaaS solutions offer advantages that both directly and indirectly result in lower costs to the business. Needless to say, the infrastructure necessary to operate the in-house model can be very costly. Cloud-based SaaS solutions avoid those costs completely. The vendor takes on all those responsibilities while their customer still accesses the functionality. With that change in responsibility, there is now an opportunity to divest of such infrastructures and supporting resources – or at least move in such a direction. A SaaS solution model can have a dramatic effect on reducing total cost of ownership (TCO) for business solutions. This also paves the way for transformation to a business-centric organization as opposed to those who struggle with IT-involved change. SaaS solutions are often subscription-based. They are typically very cost-effective and most do not carry up-front license fees. This lowers initial costs. Furthermore, subscription-based services allow costs to fall against operating expenses (OpEx) and need not create demand as capital expenditures (CapEx). This can be significant when planning budget utilization and funding scenarios. Scalability We had already touched on the relatively inert nature of in-house infrastructures. When needing to grow the solution – in terms of transaction volume, expanded user-base, geographic reach, and performance – in-house solutions can be seriously challenged. Changing any aspect of the "as-is" with new requirements related to scale can require the same lengthy and costly development process. This is a major impediment to addressing business growth with complimentary growth in system capabilities. In contrast, SaaS solutions ...

Jul / 30 / 2015

We are all familiar with reconciling outgoing payments against our bank accounts. That is simple enough. For the most part these are expenses. You know who is to be paid and you know why the payment is due. Slightly more challenging is reconciling incoming payments against a bank account. Generally these are settlements made by clients. It is less apparent to what this activity is related given the scant details the transaction may carry at the bank. What organization is sending you this money? To what transaction or deal is this money associated? We may struggle, but we put two and two together and associate the client activity with the incoming payment. Both sides of this – the outgoing and the incoming payments – are key elements in a financial reconciliation. Now consider this. What if your product or service is moving money on behalf of clients? What if what had previously been a purely financial reconciliation is now an operational reconciliation potentially affecting the quality of client service? This is the case with businesses operating in the Payments space. While their service may seem simple, essentially sending messages that move money, their challenges are interesting to consider because all the concerns for transaction reconciliation are tremendously amplified. If reconciliations are not accurate and almost immediate, there is significant risk. What are in the balance are not just individual client transactions, but also client relationships and the financial integrity and perhaps viability of the operation. In Search of the Balanced Cash Flow Like it or not, Payments are viewed more and more as a commodity service. As a commodity, the relationship between the Payment business and the client may not be particularly strong. They can get their commodity from a list of trusted providers. Margins on such transactions are usually fairly small. As a result transaction volumes are needed to allow for meaningful profit. Taken all together, the flow of incoming settlements and outgoing payments must be managed to minimize risk to the business by remaining cash flow neutral. Ideally, payments should not be released until settlement is made with cleared funds. In order to achieve a balanced cash flow at the transactional level, the incoming settlement leg must be reconciled and attributed to the client and transaction in flight. Tools to recognize incoming funds and management their application to open transactions are essential. Any inefficiency or inaccuracy in that process can delay product and service delivery and impact the client relationship. In a Payments business, ensuring a quality client experience is tremendously important given the commodity dynamic. A transaction gone wrong is probably a lost client! When Money Is Inventory Of course any inventory is money in the valuation sense. Those widgets in the warehouse are worth something; there is so much money wrapped up in those widgets. For Payments businesses, money is inventory in the literal sense. The raw product is the purest form of liquid asset: money. Cash reconciliation is extremely important so that what could be considered “inventory logistics” is handled appropriately via Treasury and cash management activities. Those actions constitute “just-in-time” inventory management for businesses offering Payment services. To further complicate things, payments made by clients in settlement of transactions can be considered “inventory” as well – but only when full attribution (to the client and underlying transaction) of the incoming funds has been made. Depending on how quickly the relationship can be made, the realization of settlement payment to inventory can be extremely quick. As a curiosity, imagine the widgets again. What does it take to convert settlement assets back into physical widgets on a shelf? In the Payments world this transition should be very short. Only timely insight allows for prevents this transition. Cash Management to satisfy the Payments business can only be conducted properly when both incoming and outgoing transactions are fully reconciled and activities against those accounts are legitimized. Timely reconciliation is demanded to the intraday level to allow insight that drives inventory management for the Payments-based business. Dependent Partners in Service Delivery Payments businesses usually operate globally and, believe it or not, they are directing payments out of and receiving settlements into bank account accounts like any business would. They just do this by factors over and above the typical organization. They cultivate a network of banking partners to deliver payments to markets and corridors around the globe. This requires hundreds or thousands of bank accounts globally. Now consider the earlier problems previously mentioned in terms of cash management and balanced cash flows. Money comes in here. Money is directed there. Money needs to be moved to satisfy inventory demands. There must be both timely operational and financial reconciliation. When the number of accounts and transactions volumes is large – as is the case in the Payments business - there must be efficiency in the reconciliation and insight process so these key activities can be conducted. That is a problem in itself, however, when you consider that each institution has a different means of sharing activity against the accounts - different protocols to get bank statements, different formats for transaction details, different capabilities in sending reliable details to ease reconciliation - the challenge of reconciliation is significant. A toolset that allows for agility in establishing new banking partners and opening new accounts quickly against those needs without running change projects is a must. Multi-Region / Multi-Entity As Payments companies typically operate globally to facilitate payments around the world, those organizations naturally deliver their service through multiple legal entities. This necessitates a number of inter-company transfers especially when service delivery and financial ownership of a transaction transitions between the legal entities and related operations in the course of processing. For every logical transaction with the client, there may be multiple internal transactions tied to various legal entities. These transactions as well need proper reconciliation before the accounting of the legal entities and parent organization can be settled. The volume of transactions and timing of this reconciliation (e.g. at period end) can make this work challenging. The process and tools must be up to the task. The Need for Insight Other challenges exist for the Payments business – again amplified when compared to other forms of business. A Payments business is a bigger target for fraud. Only when insight into reconciliation state and exceptions realized in an accurate and timely way can fraud be managed. Capable reconciliation tools are demanded to counter this source of operational and reputational risk. Concerns that have their basis in regulatory and licensing requirements are significant for Payments businesses. Things like Average Daily Transaction Limits (ADTL), transaction escheatment, Dodd-Frank, EMIR and equivalent reporting can only be accomplished when the necessary inputs from a robust reconciliation process are available. Failure to comply with these requirements can put the business in jeopardy. We Are All Payments Businesses The truth of it is that the concerns of the Payment business should not be unique. Their concerns should actually be the same concerns for any business striving for financial and operational integrity. We all need insight into financial standing and operational service delivery. The only real difference (aside from regulatory) is that a Payment business may have more at stake when transaction reconciliations are challenged in timely execution and accuracy. In that sense, we should all appreciate the fundamentals of concern exemplified and amplified in the Payment business and take on board the importance of the reconciliation function and enabling toolset in any business environment.   Jeremy Shanahan is ReconArt’s Vice President of Business Solutions. He is responsible for product strategy and coordinating product delivery for the global organization. Jeremy has over 25 years of experience in enterprise architecture, software design and implementation of global, financial-focused software technology solutions. ...

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