What Is Payment Reconciliation?
Payment reconciliation is the process of matching the payments you receive from retailers against the invoices you sent them. The goal is to make sure you were paid the correct amount for every invoice, and to identify and investigate any discrepancies.
For suppliers working with major retailers, reconciliation is an ongoing task. Payments often arrive with deductions, adjustments, or partial amounts, and you need to understand exactly where every dollar went.
How Reconciliation Works in RetailReady
RetailReady automates much of the reconciliation process for you. When an 820 Payment Advice arrives from a retailer, the system automatically matches the payment to the invoices it references. Here is what you will see:
- Fully matched invoices: The payment amount matches the invoice total exactly. These are marked as paid and require no further action.
- Partially paid invoices: The payment covers only a portion of the invoice. The remaining balance is highlighted so you can investigate.
- Unmatched payments: Occasionally, a payment references an invoice number that does not exist in your system. RetailReady flags these for your review.
- Deductions: Any amounts withheld by the retailer are broken out with reason codes so you can see exactly what was deducted and why.
Why Your Payment Might Be Less Than Expected
Receiving less money than you invoiced is frustrating, but it is very common in retail. Here are the most frequent reasons:
Early Payment Discounts
If your terms include an early payment discount (such as 2/10 Net 30), the retailer will deduct the discount percentage when they pay early. This is legitimate and agreed upon in your trading terms. If the retailer takes a discount but pays late, you may have grounds to dispute it.
Compliance Deductions
Retailers impose fines for non-compliance with their shipping and EDI requirements. These can include late shipments, missing or late ASNs, incorrect labeling, or routing violations. These deductions are taken directly from your payment.
Damaged Goods Claims
If the retailer's distribution center reports that product arrived damaged, they may deduct the cost of the damaged goods from your payment. This can sometimes be disputed if you have evidence that the product left your facility in good condition.
Co-op and Promotional Charges
If you participate in co-op advertising, promotional programs, or have agreed to slotting fees, retailers will often deduct these amounts from your payments rather than invoicing you separately.
Using RetailReady's Reconciliation View
The reconciliation view in RetailReady gives you a clear picture of your payment status:
- Review the payment summary to see total amounts received versus total amounts invoiced for a given period.
- Drill into individual payments to see which invoices each payment covers and what deductions were taken.
- Filter by status to quickly find invoices that are partially paid, unpaid, or have deductions that need review.
- Export the data if you need to share it with your accounting team or import it into your bookkeeping software.
Tip: Make reconciliation a regular habit. Reviewing payments weekly helps you catch discrepancies early, while the details are still fresh and within the dispute window.