Written by Travis Oot, CPA
Running a restaurant involves meticulous financial oversight, especially when it comes to reconciling payments. A common issue owners face is matching point-of-sale (POS) reports to their bank deposits from credit card processors. This becomes particularly frustrating due to the delay between when a customer pays and when the funds hit the bank account, typically 48 to 72 hours for restaurants and retail businesses, though it can extend up to a week or more in other industries. Understanding how to bridge this gap is critical for accurate bookkeeping and better cash flow management.
Key Points:
- Credit card processing delays are common, typically ranging from a few days to a few weeks.
- POS systems report sales in real time, but bank deposits often lag.
- Reconciliation requires aligning POS reports with processor batch reports and deposit dates.
- Understanding fees, chargebacks, and processing schedules is essential.
- Consistent reconciliation improves financial accuracy and identifies discrepancies early.
- Bank reconciliations are key to resolving unmatched deposits and maintaining accurate records.
- Reviewing processor agreements and shopping for better terms can help reduce deposit lag.
Why the Lag Happens
When a customer pays with a credit card, the POS system records the transaction instantly. However, credit card companies operate on a different schedule. After the transaction is authorized, it enters a batch processing cycle that can take several days. Additional time is often added by intermediary banks or delays in settlement from payment processors. Typical processing timelines for card payments can extend up to two weeks, depending on the processor and banking relationships involved.
Steps to Reconcile POS Reports with Bank Deposits
- Match POS Transactions with Batch Reports
Your POS system should allow you to generate daily or weekly sales reports. Use these to identify the total credit card sales made. Next, access your payment processor’s batch reports. These show what payments were processed and when they were sent to your bank. - Identify Deposit Dates and Amounts
Log in to your business banking portal and note when and how much was deposited. Keep in mind that deposit amounts are often net of processing fees, making exact matches with gross sales reports difficult without adjustments. - Account for Fees and Chargebacks
Many processors deduct their fees before transferring the money. Ensure you’re comparing net amounts or adjusting for fees to reconcile correctly. Also, watch for chargebacks or refunds that may affect the final deposited total. - Use Reconciliation Tools
Accounting software like QuickBooks or restaurant-specific tools can help automate parts of this process. These tools sync with POS systems and bank feeds to make matching transactions more manageable. - Establish a Reconciliation Routine
Perform reconciliations weekly or bi-weekly, aligned with your processor’s typical deposit schedule. The goal is to spot variances early, whether due to errors, unrecorded refunds, or potential fraud.
Common Pitfalls and How to Avoid Them
- Ignoring Processor Reports: These are the bridge between your POS sales and the bank deposits. Skipping them often leads to missed discrepancies.
- Assuming Daily Deposits: Not all processors operate on a next-day funding model. Some aggregate over multiple days.
- Mismatching Gross and Net Sales: Failing to adjust for processing fees or other deductions can create apparent discrepancies. This often leads to incorrect entries if not identified during reconciliation.
- Failing to Reconcile with Bank Statements: Business owners may incorrectly code unmatched deposits as revenue without investigating possible discrepancies. Regular bank reconciliations help catch and resolve these mismatches, ensuring more accurate financial records.
How to Improve Payment Lag
While some delays are inherent in credit card processing, restaurant owners can take proactive steps to reduce the lag:-
Negotiate with your current processor: Some providers offer quicker funding options or can adjust batch timing based on your business needs. If funds are delayed more than a week, consider negotiating a more favorable deposit schedule with your processor to support healthier cash flow.
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Shop around: Evaluate other payment processors to find one with faster deposit timelines or lower fees.
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Explore next-day funding: Depending on volume and creditworthiness, you may qualify for expedited processing options.
- Analyze processor contracts: Understand your provider’s specific timelines and any hidden terms that affect deposit timing.
- Improve cash management: Although not directly related to credit card processing, managing incoming cash promptly and implementing controls to prevent theft are also critical for maintaining steady cash flow in the restaurant industry.
Reconciling credit card payments may seem tedious, but it’s a vital part of maintaining financial control. Understanding the lag, using the right tools, and maintaining a structured approach helps restaurant owners close the gap between the POS screen and their bank statements. When done regularly, it safeguards profitability and builds trust in your financial data.
About the Authors
Travis Oot, CPA
Travis joined Trout CPA in 2015 after earning a Bachelor of Science degree in Accounting from York College of Pennsylvania (cum laude). As a Senior Manager, Travis is actively involved in the firm's Professional Services, Consumer Services, and Transaction Advisory Services groups. He assists clients with tax preparation, mergers and acquisitions, and business consulting.
