How reconciliation works
One side is the internal record: orders, ledger entries, balances. The other is external: a bank statement, an acquirer's settlement file, a card scheme report, a custodian's statement or the blockchain itself.
Matching rules pair items by reference, amount, currency and date. Most pairs match automatically, and what is left over are breaks:
- Timing: one side has booked the item and the other has not yet
- Fees and FX: the amount received is net of a charge nobody booked
- Missing items: money in the bank with no order behind it, or the reverse
- Duplicates: the same item booked or paid twice
- Wrong references: money that arrived and cannot be attributed
Why reconciliation matters
An unreconciled ledger is a guess. Breaks left open hide lost money, double payouts, fraud and software faults, and they grow harder to explain with every day that passes.
For regulated firms the comparison is a duty, not a habit: safeguarding rules require client funds to be checked against the firm's own records. The entries on safeguarding and on the double-entry ledger set out what those rules ask and how often.
What makes reconciliation automatic
A unique reference given to every payment at the start, and carried through to the bank and back, lets most items match without a person. The rest goes to a queue where each break has an owner, an age and a reason once it is closed.
Reconciliation, settlement or clearing?
- Settlement
- The actual movement of funds between the parties. Reconciliation checks afterwards that what settled is what was expected.
- Clearing
- The exchange of payment records and the calculation of what each party owes, before settlement.
- Audit
- A periodic review by an independent party. Reconciliation is the firm's own continuous control, and an auditor asks to see it.
Where Reconciliation shows up in a platform
Modules that do the work
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- Analytics & monitoringProduct analytics, attribution, engagement and crash reports, on a tracking plan you control.