the future of offline transactions

Just picture this: You're on a sunny beach vacation, sipping a cocktail, when you realize you forgot your wallet. No worries, you think, “most places accept cards these days.” But then, you reach for your phone and...it has no battery. You're forced to resort to good old-fashioned cash.

Sounds harmless, right? But for your accounting records, that offline transaction is potentially unreliable and prone to discrepancies.

Think of reconciliation as meeting with an old friend you haven't seen in years. You both have a general idea of what happened in your lives, but the details might be fuzzy. Maybe you remember that backpacking trip across Europe, but neither of you can recall exactly how much you spent on that hostel in Prague.

In accounting terms, reconciliation is the process of comparing two sets of records, like your bank statement and your online internal accounting system, to ensure everything adds up. But when it comes to offline transactions, this "reunion" can be fraught with forgotten details and mismatched memories.

Why should I care?

• Delayed Processing: Unlike online transactions that register instantaneously, offline transactions often get processed in batches, sometimes with significant delays. This creates a time gap, leaving your records hanging in limbo.

• Manual Data Entry: Forget the ease of swiping a card and having everything magically appear in your system. Offline transactions often require manual data entry, increasing the risk of human error – a misplaced decimal here and so on.

• This lack of real-time visibility makes it harder to track your spending and stay on top of your finances.

So what?

It can lead to several issues like:

• Inaccurate Reports: Mismatched records result in inaccurate financial reports, making it difficult to understand your true financial health.

• Cash Flow Mismanagement: Delays in processing offline transactions can throw your cash flow projections off track, potentially leading to unexpected shortages.

• Compliance Challenges: Accurate records are crucial for meeting tax and regulatory requirements. Reconciliation issues can make it difficult to comply with these regulations.

Thankfully, we are in 2024. The world of finance isn't stuck in the offline era. Here's what the future holds for us:

Real Time Reconciliation (RTR)

• Real-Time Processing: Technological advancements are paving the way for real-time processing of offline transactions, eliminating the delays and discrepancies associated with batch processing.

• Automated Data Entry: Solutions are emerging to automate data entry for offline transactions, minimizing the risk of human error and streamlining the reconciliation process.

• Improved Visibility: Integration between financial management software and offline payment systems provides greater visibility into all your transactions, allowing you to track your spending in real-time.

While offline transactions may not vanish overnight, technological advancements are making reconciliation a less of a ‘I need a panadol/aspirin’ situation.