Payment Reconciliation and Management for SaaS Digital Platform Customers; a Simplified Guide
Payment reconciliation and effective payment management tools help SaaS digital platforms customers and marketplaces stay on top of their finances, manage their cash flow and improve visibility into their business
As a growing platform, you want to make it easy for your customers to accept payments. You want to help them stay on top of their expenses so they can better manage cash flow and ensure steady business growth. You also want a payment solution that doesn’t expect them to jump through complex hoops with a third-party payment processor or their bank application before they can experience any of these benefits.
UNIPaaS, masters of embedded finance, can help you simplify your customer’s business life, allowing them to accept payments and manage their finances seamlessly. We make it easy for your customers to accept payments with our embedded payment solution that allows you to collect payments from your customers directly through your own platform. It is smart and simple and it helps you redefine payment management for your customers.
What is Payment Reconciliation and Why Should SaaS Digital Platforms Care?
The definition of payment reconciliation in finance is the accounting process that any business can use to manage its visibility into account balances, expenditure, and payments. When your customers undertake a payment gateway reconciliation, they compare their payments on their bank statements with their own payment records to ensure that every last entry is correct.
They need to undertake payment reconciliation at least once a week, but often they only undertake this once a month because of time and admin constraints.
When your customers check bank statements regularly, they will find discrepancies that can save them money and time. These discrepancies are normal - they will encounter them often throughout the business life - and payment reconciliation is the best way to catch issues and resolve them. If your customers don’t regularly check they could miss mistakes and these could have a ripple effect across their bank accounts and finances.
Payment reconciliations are vital for catching payment problems.
What is the payment reconciliation process?
Marketplace payment reconciliation is broken down into two approaches – the internal approach and the external approach.
The internal approach
SaaS platforms typically track payments and bills using solutions such as spreadsheets, accounting software, or manually storing paperwork. Invoice scanning and manual invoice entry are also admin-intensive tasks that platforms are expected to manage and keep up-to-date. These processes can introduce errors and make managing payments and reconciliations more challenging. Manual entry or checking paper documents against bank accounts can introduce mistakes, result in misplaced receipts and incorrect filing.
While spreadsheets can be useful for payment tracking, they are prone to errors. The most reliable approach is to use accounting payment reconciliation software designed to integrate with banking systems and automate payment logging (known as a bank feed), thereby reducing the risk of errors.
The external approach
Externally, the bank records transactions and provides monthly statements. By comparing this external data with internal records, SaaS platforms can ensure accuracy and alignment. Payment reconciliation combines internal and external data to ensure that everything aligns.
This is perhaps one of the most interesting concepts for the SaaS platform. It allows for invoices and payments to be automatically recorded from one end while connecting to the bank feed on the other, combining both the internal and external approaches into a fully automated solution that does all the heavy lifting.
Automation technologies like UNIPaaS can be leveraged to automatically record invoices and payments, significantly reducing the admin load while increasing accuracy, time savings, and reduced manual effort. Plus, because an automated solution of this calibre can integrate bank feeds, reconciliation is smooth, efficient, and accurate.
How does payment management fit within the SaaS digital platform?
Payment management for SaaS digital platforms has become a critical component of compliance and ensuring that companies stay on top of their admin. The Second Payment Services Directive, also known as PSD2, is a European payments law that has introduced significant changes that directly affect platforms and how they manage their reconciliations. While PSD2 is primarily a concern for marketplaces and payment service providers, some SaaS platforms may fall under its regulatory umbrella. This is particularly true if the SaaS platform handles payments and acts as an intermediary between buyers and sellers.
SaaS digital platforms traditionally act as a go-between for both sellers and buyers and often use payment solutions to manage the movement of funds across the platform to each party. PSD, the original Payment Services Directive, was established in 2007 to ensure that online and cross-border payments were safer for all involved parties. Then, in 2013, the European Commission introduced amends to this directive that rolled down into PSD2, launched in 2017.
According to the European Payments Council, the new directive aims to make payments even safer for consumers while ‘fostering innovation and competition’. It’s also designed to make it easier for new players to enter the market. There are multiple considerations that enforce, define, and surround PSD2 and you can read them all in the European Payments Council infographic, but the key consideration here is payments management for the SaaS digital platforms.
SaaS digital platforms are immensely important to the digital economy, so they have seen growing regulatory scrutiny and compliance expectations. They need to be spaces where customers are assured of safety, where their finances are protected and there are rules around money laundering and competition. SaaS digital platforms now need to ensure that they have a financial licence, if they are handling the transactions themselves, or that they use a trusted third-party embedded payments platform to ensure that they can manage payments, provide detailed payment reconciliations for audits and admin, manage seller and buyer payouts, and achieve better regulatory compliance.
Plus, other than avoiding hefty fines for non-compliance, SaaS digital platforms that pay attention to PSD2 will find that they have greater scope for innovation. SaaS platforms should carefully assess their specific circumstances and consult legal and compliance experts to determine the extent of their obligations under PSD2. UNIPaaS is designed to help SaaS platforms simply bypass this stress and complexity with intelligent capabilities and robust security.
Why do SaaS digital platforms need payment management?
Innovation and opportunity. It’s that simple. Suppose your SaaS digital platform uses a reliable and agile embedded payments platform. In that case, your customers can manage their payments more efficiently and then discover ways to fully own the customer journey from end-to-end. It allows you to be more competitive at a time when mandates like PSD2 have opened up the market to disruptors and innovators - it’s noisy, busy, and crucial that your platform has the functionality it needs to stand out.
Why is it Crucial for SaaS Digital Platforms to Manage Payments Effectively?
There are five key reasons why you need to undertake the payment management process (and use UNIPaaS):
- Ensure that your internal and external records of payments and transactions are identical.
- Catch payment errors to minimise risk and the impact on your bottom line.
- Potentially catch fraud.
- Tightly manage payments by catching unpaid invoices and bills.
- Ensure your business finances and records are in perfect health for audits, taxes, and financial institutions. A clean and accurate financial record puts investors' minds at ease and can help you drive growth.
Five tips for successful payment management
Payment management approaches come with their fair share of challenges, so you must avoid common pitfalls and use the right tools to stay on track. These are the top five tips:
- Keep all your information in one central space so you aren’t moving between different systems. You could lose important information if some of your payment tracking is via receipts and paperwork and the rest is tracked in a spreadsheet. Have a single source of truth.
- Reconcile regularly. It’s time-consuming, boring, and tedious, yes, but it’s essential. Schedule time in your diary to do it and don’t compromise on this – do it regularly, do it meticulously, and stay on top of your expenses. If you set aside a small amount of time every week, then you will have less paperwork to go through than if you do it once a month, making it far less daunting.
- Use accounting software or a payment reconciliation solution that is licensed, approved by the regulator, modern, optimised, and easy to use as this will help you minimise errors, streamline payment reconciliation and reduce the amount of time spent on admin. By automating your reconciliation, you can change how you feel about 90% of your admin and cut out the errors at the same time!
- Use your payment management platform to keep track of payments so you are always on top of who has or has not paid you. This will allow you to find discrepancies, chase slow-paying clients and even find trends in payments that can help you better manage clients who are bad at paying.
- Establish best practices so everyone in the office knows exactly how best to capture payments and receipts. This ensures that there is less room for error and reduced admin when it comes down to the crunch. If everyone is on the same page, then payment reconciliation can be a lot smoother.
How UNIPaaS helps with payment management for SaaS digital platforms
UNIPaaS is built on a flexible architecture that will turn your platform into a new financial growth engine and help you automate your payment reconciliation process, invoicing, and payment requests. Using UNIPaaS, you gain better control over your payment journeys and improved visibility into your transactions, allowing you to better manage your funds and payment management.
The UNIPaaS advantage
With UNIPaaS, your customers come first. They can:
- Avoid filling in information repeatedly. The payment on-boarding is embedded within the platform registration process and makes life easy and simple.
- Accept payments from a variety of payment methods, including credit cards, debit cards, instant bank transfers, Apple Pay and Direct Debit.
- Accept payments in a modern, secure and simple way, with a single click.
- Complete payment control in real time. UNIPaaS offers you real-time confirmation of your payments including exact balance, confirmation, settlement time and transaction status. Imagine having the merchant account embedded in your platform without needing to leave to visit a third-party website for payment? Everything happens in your domain with UNIPaaS.
The SaaS platform advantage
The benefits you get as a SaaS platform enable you to:
- Build your data assets
- Provide insights
- Create and provide your own advanced financial services that use white-label embedded finance to sit under your brand
- Increase stickiness
UNIPaaS: The #1 choice for automated marketplace payment reconciliation
UNIPaaS is a cost-effective solution that helps you make it easy for your customers to accept payments. And having end-to-end payments is just the start - we also provide you with the tools you need to offer financial services on your platform and make it easy to get ahead of the curve and offer these services to your customers.
Say goodbye to complicated, time-consuming, and overly complex payment management, and say hello to automated payment reconciliation and intelligent simplicity provided by UNIPaaS.