Reconciliation: What it is and why uour Travel Business needs it

Ever wonder why the amount of money in your bank account at the end of the day doesn't quite match your total sales? It's a common issue for travel businesses, and the answer lies in a crucial financial process called reconciliation. While it might sound like complex jargon, it's simply about making sure your financial records match up.

Running a successful travel business means juggling a lot of moving parts. But what about the one that often goes unnoticed until it's a problem: your payments?

One of the most common challenges we see travel operators face is a disconnect between their sales records and the money in the bank. This gap isn’t just a minor issue; it’s a symptom of a deeper financial challenge that can impact your cash flow and profitability.

The solution lies in reconciliation—the process of ensuring your financial records are a perfect match. While it may sound like complex accounting jargon, it's a crucial practice that, when done right, provides a clear, real-time picture of your business's financial health.

For travel business owners and their teams, understanding the two main types of reconciliation is key to a healthy financial operation. Both are essential for getting a complete, end-to-end view of your business's finances.

1. Booking-Level Reconciliation

This is the first and most direct type of reconciliation. Think of your business as a bustling library. Every time a customer 'borrows' a holiday, you 'scan' their payment (the book's barcode) and 'link' it to their unique trip (the borrower's library card).

• What it is: The process of matching a specific payment or deposit from a customer directly to their unique holiday booking.
• The Goal: To maintain a clear, up-to-date balance for every single trip you sell. With this process, you can instantly see who has paid, how much they've paid, and what they still owe.
• How it works: When a payment is made, it's tagged with a unique booking reference number. This creates a direct link, allowing you to easily view all payments associated with a particular booking. This avoids confusion and ensures you know the financial status of each trip.

While this is crucial for tracking individual customer payments, it's only half of the story. The next step, Settlement Reconciliation, handles the more complex relationship between your business and the banks.

2. Settlement Reconciliation

This is the second, more complex type of reconciliation that focuses on the money you receive from your payment processor.

• What it is: This process matches the lump sum of money deposited into your bank account by the payment processor with the individual transactions you processed over a specific period, such as the previous day.

The Challenge: Why the Numbers Never Match Up

The amount you receive in your bank account rarely matches the total value of your sales for that day. For example, you might have made £10,000 in sales but only receive £9,475 in your bank account. So, where does the difference come from?

Several things can cause this discrepancy:

• Processor Fees: The processor deducts their transaction fees, monthly charges, or higher fees for international cards - this issue can be avoided by agreeing gross settlement terms with your acquirer.
• Refunds: Any money you've returned to customers is subtracted from the total.
• Chargebacks: If a customer disputes a charge, the funds may be temporarily or permanently removed from your account.
• Delayed Payments: Some transactions may take longer to clear and are not included in that day's batch.

This process is crucial for accurate accounting. It explains why the cash in your bank doesn't equal your daily sales figures and helps you accurately update your main accounting system (like Xero or Sage) without manually digging through reports to find every fee, refund, or chargeback.

The Solution: End-to-End Reconciliation

Managing both booking-level and settlement reconciliation manually can be a huge headache for any travel business. It's time-consuming, prone to human error, and takes your team away from what they do best: selling trips.

This is where Felloh’s end-to-end reconciliation comes in. We automate the entire process, giving you a clear, real-time picture of your finances — from the moment a customer pays to the moment the funds hit your bank account.

Ready to simplify your financial operations? Give us a call and learn how Felloh can help you achieve seamless end-to-end reconciliation and give you back valuable time.