What reconciliation does
Reconciliation compares your internal ledger to an external source of truth such as a bank statement or a processor report. The goal is to confirm that every movement you recorded actually happened externally, and that nothing external is missing from your books.
The matching problem
Each side has its own records with different identifiers and timing. Reconciliation matches entries by amount, date, and a shared reference, then flags anything that does not pair up.
Three outcome buckets
- Matched entries appear correctly on both sides.
- Internal only entries are in your ledger but not the statement, often timing or a phantom write.
- External only entries are on the statement but missing from your ledger, often a dropped event.
Operational guidance
- Run reconciliation on a fixed cadence like daily so breaks surface fast.
- Treat unmatched items as exceptions that a human or rule must resolve.
- Track the break age so old discrepancies escalate.
Key idea
Reconciliation matches your ledger against external records so divergence is caught and resolved before it compounds.