Why Daily Credit Card Reconciliation is Essential for Hotels [+ Tips & Resources]

Guest room charges, food and beverage purchases, room bookings, supply orders — these are just some of the many financial transactions a hotel handles on a daily basis. That’s where the importance of credit card reconciliation comes in.

Credit card reconciliation is the process of comparing a company’s credit card transactions that are collected and processed against the sales posted in point of sale/property management systems (POS/PMS) systems to ultimately accurately record revenue to the bank account.

Unfortunately, many hotels still rely on manual processes to reconcile credit card entries. These are often time-consuming and error-prone tasks that are especially challenging when it comes to onboarding new accounting hires. Plus, delayed or inaccurate credit card reconciliation can leave hotels exposed to guest disputes and financial losses.

In this guide, we’ll explore the reconciliation process, benefits of switching to an automated solution, and best practices for implementing this type of technology in your hotel.

Traditional vs. Automated Reconciliation Processes

Traditional methods of credit card reconciliation typically consist of spreadsheets and legacy systems that require manual data entry.

An automated solution, on the other hand, can expedite the process, saving hours and enabling your employees to focus on other important tasks. Plus, the right solution can even import, tag, and categorize all transactions while simultaneously allowing for rules-based reconciliation. You can also receive immediate alerts for discrepancies or potential fraud, which enables you to handle these issues in a timely manner instead of having to wait until they are found hours later through manual reconciliation.

Benefits of Automation

One of the major benefits of automation is the time it will save your accounting team, which frees up your employees to focus on more value-added tasks. 

Automation is also essential for audits and compliance. Plus, it can help you address any chargebacks in a timely manner, catch any accounting errors, or flag instances of potential fraud. 

When looking for a solution, consider one that’s fully automated so that you and your employees can focus on other important responsibilities. Look for an automated program that reconciles and generates reports overnight so that your employees are equipped with the data, insights, and information they need at the start of their day.

How Do You Reconcile Payments in Hotels?

How exactly does an automated solution reconcile credit card transactions? Here’s a brief breakdown of the process.

  1. Gather reports and records, including all items from your POS/PMS and credit card processors and/or gateways.
  2. Obtain information/reports from your credit card processor(s) either through automation or manual exports. This is the data you need — details about each processed batch of transactions, including the number of transactions and total revenue.
  3. Match transactions. Look at each transaction and ensure the posted credit card transaction matches the charge in the POS or PMS.
  4. Account for credit card fees. Credit card fees and commissions are part of the process, which means they must be accounted for when it comes to reconciliation, in addition to exchange rates for foreign currencies. 
  5. Identify and match discrepancies or exceptions. You also need to review pending transactions and include any accruing interest if applicable. When an exception is identified, it is crucial that a corrective posting is made in appropriate source systems to “clear” the exception and accurately record revenue. 
  6. Generate reports to be pushed to the general ledger. This is the final step in the process in which you will create detailed reports that summarize the reconciled credit card transactions. It’s important to include details such as dates, amounts, and descriptions for each of your accounts (operational bank account, cash clearing account, and variance account). The final step is to transfer the generated reports to the general ledger, which serves as the central repository for all financial transactions.

The Risks of Delayed or Inaccurate Credit Card Reconciliation

Delayed or inaccurate credit card reconciliation can create several risks for hotels, including:

  • Guest disputes: If a guest disputes a credit card charge that has not been correctly reconciled, the hotel may not have the documentation to prove the charge was legitimate. This can result in lost revenue, chargebacks, and damage to the hotel’s reputation.
  • Fraudulent charges: Without daily credit card reconciliation, hotels may only detect fraudulent charges once they have already been processed. This can result in financial losses and harm to the hotel’s image or standing. 
  • Compliance issues: Hotels must comply with various regulations and standards related to financial reporting and data security. Without proper credit card reconciliation, hotels may be at risk of non-compliance, which can result in fines and other penalties.

Best Practices for Implementing Reconciliation Automation in a Hotel

If you want to get the most out of your credit card reconciliation process, keep the following tips in mind: 

  • Reconcile credit card transactions daily (if possible). This should happen at least once a week, but daily is ideal. Regular reconciliation enables you to promptly handle chargebacks, identify errors, and highlight potential fraud cases.
  • Know the flow of your data. Ask yourself these questions: Where is your data coming from? Where is it going? How is it organized? Are you missing key details? Do you have the right systems in place so that your information is easy to find and accurately categorized? These are all important considerations to keep in mind. 
  • Embrace automation. There are many advantages to an automated solution — time savings, reduced errors, ensured compliance, increased efficiency — so ask yourself this: Can you afford a miscalculation or misplaced data entry that will cost your business thousands of dollars? 
  • Participate in continuous learning/training. It’s important to stay up to date on compliance standards and participate in training sessions so that you’re aware of potential issues or compliance changes. 
  • Secure all accounting information securely. This should be standard practice regardless of your reconciliation process, but it’s worth reiterating that it’s important to secure your financial records and limit access to authorized personnel. 
  • Keep thorough documentation. This is a crucial best practice, particularly for ensuring compliance and creating a detailed audit trail. Documentation facilitates transaction verification and provides protection in case of legal or financial issues.

How Automated Credit Card Reconciliation Can Help

Automated credit card reconciliation solutions like Total Recon’s Credit Recon solution can help hotels mitigate the risks associated with manual credit card reconciliation. With this technology, hotels will be able to:

  1. Reconcile credit card entries automatically. Credit Recon automatically reconciles credit card entries with the processor and PMS, ensuring that all transactions are accurately recorded and accounted for. Any exceptions or discrepancies are highlighted and reported, making it easy for hotels to resolve issues quickly.
  2. Reconcile in minutes. With Credit Recon, hotels can reconcile credit card entries in minutes instead of hours, freeing up time for staff to focus on other tasks.
  3. Enhance audit compliance. Credit Recon helps hotels maintain audit compliance by providing accurate and timely reconciliation reports.

Daily credit card reconciliation is critical for hotels that handle a high volume of credit card transactions. While manual reconciliation can be time-consuming and error-prone, automated solutions like Total Recon’s Credit Recon can streamline the process, reduce errors, and enhance audit compliance. By implementing an automated credit card reconciliation solution, hotels can reduce risk exposure, ensure accurate financial reporting, and provide better service to their guests.

Are you ready to see what Total Recon can do? Request a free demo today, and we’d be happy to answer your questions and show you the benefits of our full-suite solution.