How to Automate Reconciliation of Credit Card Transactions to Supplier Payments in Workday®

A common payment method for organizations to pay invoices from their suppliers is to use a credit card. Rewards programs offer incentive to pay as many invoices as possible by credit card. There are large cash back benefits and points that can be redeemed. The more money spent on the card the greater the rewards. In addition, paying by credit card can improve cash flow, speed of payment, and minimize the risk of fraud.

But the downside is having to reconcile these payments. The reconciliation effort typically involves some manual matching of Workday payments to the transactions on the credit card statement. Layer in the complexities of managing multiple cards, canceled payments, invoice adjustments, and unposted payments.

Wouldn’t it be nice if you could load your credit card statements into Workday and leverage bank reconciliation functionality to reconcile your credit card payments? In this blog post I want to share a solution that can speed up your reconciliation process and free up more time to focus on discrepancies.

First, let’s look at the different types of credit card options available for organizations to pay their suppliers.

• Purchasing Cards (P-Cards) – physical, plastic cards for employees to make business related purchases. Allows an organization to set controls such as restrict purchases to certain merchant category codes and set spending limits. Typically used for high volume, low value purchases and for the types of purchases an individual would make.
• ePayables Solution – Essentially a virtual, single use “card-less” card. An extension to P-cards but offers improved fraud protection, reconciliation and spend control. These cards are used for high volume, high dollar purchases. Think construction projects and healthcare purchasing. ePayables solutions are increasingly gaining traction because it benefits both buyers and suppliers.

Whether using traditional P-cards, virtual cards or both, a solution can be configured in Workday to help automate reconciliation of card payments.

Solution to auto-reconcile credit card payments

Central to the solution is the use of a dummy credit card bank account from which your credit card payments will be paid and loading your credit card statements as bank statements. Utilize bank matching rule sets to automatically reconcile transactions and highlight those transactions not matched. Below is an overview of the setup tasks.

• Create a new payment type.
• Create a dummy bank account.
• Modify your bank routing rule.
• Update your Cash posting rule.
• Ask your provider to send your credit card statements in BAI2 format. If your provider does not support a BAI2 format, ask for the statement in a CSV format and transform it to BAI2 format.

When it’s time to record the actual withdrawal from your operating account to cover the total cost of transactions for the period, you can use an ad hoc bank transaction and specify the credit card liability account or create a supplier invoice to pay the provider.

Please reach out in the comments if you have any questions on this topic.