The parking industry has transformed in the last ten years. It has moved away from ordinary ticketing machines to the use of third-party parking apps such as RingGo and PayByPhone. Such apps push parking towards a more digital framework, allowing users to pay quickly through their mobile phones rather than relying on loose cash. From an end-user perspective, increased reliance on these third parties has generated more ease of use and arguably a quicker service.
But what about the intermediate clients? What about the car park owners that rely on parking apps track and receive payments? And how does such a reliance affect the reconciliation processes employed by them?
Current reconciliation workflows
Typically, car park owners operate multiple revenue streams, combining cash and digital payments.
This, of itself, can be a task to reconcile and achieve a final position of parking revenues. Whether performed daily, weekly or monthly, online systems will provide a figure that requires validation.
Even though collection can be complex, validating cash receipts is relatively straightforward: you match your physical cash with your summary system data.
However, this becomes more difficult with digital payments.
Third-party parking apps facilitate transactions on behalf of car park owners, taking a small percentage of the transaction as payment before transferring the outstanding amount to the owner. They provide data of all transactions based on location, car ID, and their fee at individual transactional level.
The big issue here is how car park owners can validate this digital data. How can they ensure complete and correct payment is received, an accurate percentage has been applied to the payment, and the correct credit has been transferred? This becomes a task in validation.
Parking app validation
Validation and revenue recognition comprise two concepts – data completeness and accuracy of data. In a nutshell, we may ask two questions concerning data validity:
- Are all the transactions that took place included in the dataset?
- Are all the transactions included in the dataset accurate?
Operators such as RingGo provide car park owners with the data they want. How then can this data be substantiated?
Reconciliation, whereby you recognise a particular transaction tracked on your online system, and match it to the transaction listed in the data provided by the third party, will confirm both the completeness and accuracy of the transactions.
Revenue recognition is therefore based on the internal online system, and is subsequently confirmed against third party data. This occurs in conjunction with the physical cash collected and added to the online system.
Of course, this model assumes an online system exists in the first place. What if car park owners rely solely on the data provided by the third party? How then can they validate this information?
The obvious answer is that they can’t.
The car park owner must trust that the provided data and settlement are complete and accurate.
Recognition of revenue here is based solely on the information provided by an external party. This increases reliance and dependency on systems over which there are no further checks and balances. Increased reliance prohibits the effective management of discrepancies and exceptions that undoubtedly arise where transactions occur on a daily basis in multiple locations. Cut off times for generating and receiving data, and transaction source tracking, only exacerbate this.
To rely wholly on data provided by third parties is to become wholly dependent on them without proper transparency and accountability. Not only could this lead to unbalanced business relationships, but it could have severe financial, legal and reputational implications for everyone involved.
As car park owners move towards digital over cash transactions and further towards reliance on third-party parking apps, robust internal processes must be in place to ensure the proper validation of such transactions.
If you found the above article of interest, check out our Parking Reconciliation page to find out more about how you can sure up your internal workflows.