What is Landing Order?
Landing order is a term used in payment processing to refer to the sequence in which transactions are settled and funds are deposited into a merchant’s bank account. It determines the chronological order in which payments from credit card transactions, online purchases, or other payment methods are received and credited to the merchant’s account. Understanding landing order is crucial for businesses to manage cash flow effectively and reconcile their financial records.
Understanding Landing Order
Imagine you’re at an airport waiting for flights to land. The landing order is like the sequence in which planes arrive and passengers disembark. Similarly, in payment processing, landing order refers to the sequence in which payments from different transactions arrive and are deposited into the merchant’s bank account. This sequence can impact a business’s cash flow and financial reporting.
Key Aspects of Landing Order
- Transaction Settlement: Landing order determines when funds from credit card transactions, online payments, or other types of transactions are settled and deposited into the merchant’s bank account. Transactions are settled based on the processing timeframes and procedures of the payment processor or financial institution involved.
- Cash Flow Management: The landing order of transactions can have significant implications for a business’s cash flow. Transactions that settle earlier may provide immediate access to funds, allowing the business to meet its financial obligations or invest in growth opportunities. Conversely, delayed settlement of transactions may impact cash flow and liquidity, requiring the business to manage its finances accordingly.
- Financial Reconciliation: Proper accounting and financial reconciliation require businesses to accurately record and reconcile incoming payments with corresponding sales or transactions. Understanding the landing order helps businesses reconcile their financial records by matching deposits with corresponding sales or invoices, ensuring accuracy and transparency in financial reporting.
Example of Landing Order
Let’s consider a hypothetical example to illustrate how landing order works:
Jane operates an online retail business selling clothing and accessories. She accepts payments from customers through various channels, including credit card transactions and online payment platforms. Each day, Jane receives multiple orders from customers, and payments are processed and settled by her payment processor.
On Monday, Jane receives orders from five customers, each making a purchase using a credit card. Throughout the day, these transactions are processed by her payment processor, and the funds are settled according to the landing order determined by the processor.
- Transaction 1: $50 settles at 9:00 AM
- Transaction 2: $100 settles at 10:30 AM
- Transaction 3: $75 settles at 12:00 PM
- Transaction 4: $120 settles at 2:00 PM
- Transaction 5: $90 settles at 4:30 PM
Based on the landing order, the funds from each transaction are deposited into Jane’s bank account at different times throughout the day. Jane can track the landing order to reconcile incoming payments with corresponding sales and ensure accurate financial reporting for her business.
Conclusion
In conclusion, landing order refers to the sequence in which transactions are settled and funds are deposited into a merchant’s bank account. It determines when payments from credit card transactions, online purchases, or other payment methods are received and credited to the merchant’s account. By understanding landing order and its key aspects, businesses can effectively manage cash flow, reconcile financial records, and maintain transparency in their financial reporting processes.