Published by Sascha Krüsi
With the progress of digitization and the associated opportunities of automation, retailers of all sizes can save massive amounts of time and money if they recognize and implement automation potentials. I am of the opinion that there is massive potential, especially in the area of accounting. The booking of many means of payment, such as credit cards, poses great challenges for merchants. We explain why and point out possible solutions.
Surveys of companies in German-speaking countries repeatedly show that there is still massive potential for digitalisation in various sectors. Digitalisation as the creation of digital representations has the purpose of storing information digitally and making it available for electronic data processing.
Digitalization is also often used as a synonym for automation. Thus, the digital representation of processes and information enables their automation. Exactly this potential of automation also exists in the accounting of payments, which are processed in online shops by merchants. I am talking concretely about the automation of VAT accounting, the booking of sales and fees, which are realized via the various payment methods, or the automation of returns processes and associated payment flows.
The processing of credit cards poses great challenges for merchants for various reasons, which require a lot of manual work as the volume of orders increases:
You cannot simply post the deposits to the bank account as sales. Except you have guaranteed only one VAT rate (thus also no export) and you recognize the correct commission amount directly simply by looking at the booking.
From my point of view, there are two methods how to book the turnover of credit cards in your online shop correctly. Anyways, in each case, you set up a separate account in the accounting department for each payment method (Visa, Mastercard, American Express, PayPal, PostFinance, TWINT, etc.). Alternatively, you can create one account per acquirer (e.g. Debitor Six Payment Services, Debitor Swisscard, PayPal).
Each transaction in your webshop is booked individually in the accounting department. When you sell, you open a customer account with the corresponding acquirer or payment method. If there’s a payout to your account, all acquirers provide so-called payout reports. These reports contain information about the order and the payout amount. You use this information to close the customer and post the credit card payment.
|Sales||Debitor SIX Payment Services / Revenue CHF (8% VAT)||200 CHF|
|VAT||Debitor SIX Payment Services / VAT to be paid||16 CHF|
|Payment Acquirer||Bank ZKB / Debitor SIX Payment Services||216 CHF|
|Commission Acquirer||Commission expenses credit card / bank||5.94 CHF|
This method is time-consuming because at least 4 posting records are required for one business transaction. In addition, it leads to an inflation of your ledger.
Alternatively, you can view the webshop as a subledger. Here, you post the sales revenue broken down by value-added tax at the end of each period (for example, a month). In most cases, the sales data comes from the export tool in your sonline shop or the connection of your shop to your accounting software (alternatively, you can use a PSP such as wallee, which can also give you this information - more on this below).
The payments you receive are then booked directly to the accounts receivable. In the booking record at the bank transfer you will usually also find the commission amount.
|Local Sales||Debitor SIX Payment Services / Revenue CHF (8% VAT)||20’000 CHF|
|Sales Export||Debitor SIX Payment Services / Revenue CHF (0% VAT)||45’000 CHF|
|VAT||Debitor SIX Payment Services / VAT to be paid||1’600 CHF|
|Payment*||Bank ZKB / Debitor SIX Payment Services||756 CHF|
|Commission||Commission expenses credit card / bank||15.94 CHF|
The big problem with this method is that you have no control at the individual transaction level and therefore no information about chargebacks. In addition, these are flow accounts, which are very difficult to reconcile. Furthermore, there are still many manual postings and the associated reconciliation effort. Of course, you can set the number of payments made by the acquirer to a high limit, provided that the liquidity allows you to reduce the number of bookings.
wallee now offers the possibility to activate automated accounting and to automate everything we have described above. When you’re processing transactions via wallee, we have all the information of your order on line item level including VAT rate. So, we know exactly what your customers buy at what tax rate and gross amount. If you process the transactions via wallee, we can also read the payout data of the credit card acquirer and assign them to the transactions automatically.
In other words: You save yourself time during the manual booking of sales and you have also realized a simple integration of your accounting for your web shop.
We show you for each transaction whether it has been paid or not. In wallee, you will find information on when and to which account the money was transferred and for what fees.
We keep a fully automated subledger for you. Process your transactions through us and we will provide you with a detailed statement at the end of the period, which you can then hand over to your accountant or transfer to your accounting program yourself. You’ll reduce the effort and costs and have time for more important things.
Of course we know that the data you share with us is highly confidential and sensitve. This is why we store everything encrypted in our PCI certified application.
I hope you followed me this far. Activating the reconciliation feature is very simple and can be activated per one click. As soon as reconciliation is active, wallee generates the corresponding booking records automatically. If you process credit cards via a direct wallee, payouts should be processed into your space automatically. We are working hard to integrate additional payment methods and acquirers. Currently we support the following payment methods:
It is not necessary to integrate your webshop into the accounting system. You can simply transfer the subledger to your accounting system at regular intervals. We will show you this within the next blogpost using the example of Bexio.
In the explanations above, we have shown you two methods for posting credit card transactions. If you assume that you or your accountant need approx. 5 minutes to create a booking record, this corresponds to an hourly rate of approx. 50 CHF and a booking costs approx. 4.10 CHF. If you process the payment via wallee, we take over the booking of the turnover as well as the account reconciliation in the subledger of the individual payment types automatically for 2 cents / booking. Find out how we can solve your problem.
To be honest, the solution only works if you don't already book the sales via your webshop connection. In addition, only e-commerce transactions can currently be booked. However, we are already working with partners with whom we can solve such challenges and help you holistically.
If you have any questions, please do not hesitate to contact our support team at any time.
#Credit Card Challenge
Sascha Krüsi, CEO