Reconciliation

Reconciliation is the process of confirming that two sets of records agree, for example, that a reported revenue figure matches the sum of its underlying ledger entries. In a financial model, reconciliation is what separates a trustworthy number from a plausible one.

How reconciliation works

Every reconciliation has the same three parts: a balance to be proven, a source considered authoritative, and an explanation for the difference between them. A bank reconciliation proves the cash balance in the ledger against the bank statement, with outstanding checks and deposits in transit explaining the gap. A revenue reconciliation proves reported revenue against billing system detail, with timing and revenue recognition adjustments explaining the gap.

The explanation is the part that carries the value. A difference that is identified, quantified, and attributed to a known cause is reconciled. A difference that is simply small is not.

Where reconciliation breaks

Breaks cluster in a few places. Cutoff: a transaction sits in one period on one side and a different period on the other. Currency: the two systems translate at different rates or on different dates. Mapping: an account was added in the ERP without being mapped into the reporting model, so its balance quietly disappears. Manual adjustment: someone booked a correcting entry directly in the reporting layer, which now ties to nothing.

Timing makes all of these worse. Reconciling only at month-end close means a mapping error introduced on the third of the month surfaces four weeks later, after decisions have been made on the wrong figure. Continuous reconciliation catches it while the change is still fresh and the cause is still findable.

What good looks like

A reconciliation is complete when the balance ties, every difference is explained rather than plugged, the supporting detail is still retrievable months later, and the same check re-runs the next period without being rebuilt. Unexplained differences should be logged with an owner and a date, not rounded away.

Rexfin reconciles every derived figure in your model back to source transactions, so the AI does not report a number that fails to tie out. Each figure carries a citation to the record behind it, calculations run deterministically, and policy checks flag breaks as they appear rather than at period end.