Reconciliation

Reconciliation is the process of comparing financial records from different systems to identify matches, differences, and unresolved operations.

For applications using external financial providers, reconciliation helps verify that the internal ledger accurately reflects the relevant financial activity.

Understanding reconciliation

Infrarails maintains internal accounting records.

External providers may maintain separate records of account balances, payment instructions, transactions, and settlement activity.

Because these systems can process events independently, their records may not always update at the same time.

Reconciliation helps identify and investigate these differences.

Reconciliation architecture

flowchart TD
    A["Infrarails Ledger"] --> C["Reconciliation Process"]
    B["External Provider Records"] --> C
    C --> D{"Records match?"}
    D -->|Yes| E["Matched"]
    D -->|No| F["Exception"]
    F --> G["Investigation"]
    G --> H["Resolution / Follow-up"]

Reconciliation data

A reconciliation process may compare the following information:

The exact matching strategy depends on the operation and provider.

Transaction reconciliation

Transaction reconciliation compares individual financial operations.

For example, an incoming payment may be represented by:

1. A provider transaction record.
2. An internal ledger transaction.
3. Accounting entries affecting the relevant accounts.

The reconciliation process verifies that the records correspond to the same underlying financial operation.

Balance reconciliation

Balance reconciliation compares the relevant internal accounting position with an external balance or statement.

For example:

This example assumes both values represent the same funds, currency, ownership scope, and effective point in time.

A zero difference is meaningful only when the compared balances are defined consistently.

Common reconciliation differences

Differences may occur because of:

• Delayed provider notifications.
• Transactions still in processing.
• Missing ledger records.
• Duplicate event processing.
• Currency conversion.
• Provider fees.
• Settlement timing.
• Incorrect transaction mapping.
• Failed or incomplete workflows.

Not every difference indicates an accounting error. Some may reflect expected timing differences.

Reconciliation statuses

An application may classify reconciliation results using internal operational labels such as:

These are suggested reconciliation classifications, not guaranteed Infrarails API status values.

Handling exceptions

When a difference is detected:

1. Identify the affected operation.
2. Retrieve the relevant internal ledger records.
3. Retrieve the corresponding provider records.
4. Compare identifiers, amounts, currencies, and statuses.
5. Determine whether the difference is temporary or requires correction.
6. Apply an authorized resolution process.
7. Retain an audit trail of the investigation.

Completed ledger transactions should not be altered through unsupported direct balance changes.

Corrections should use appropriate accounting operations.

Reconciliation frequency

The appropriate reconciliation frequency depends on transaction volume, provider availability, business risk, and operational requirements.

Some applications may reconcile after each relevant event, while others may also perform periodic checks.

The scheduling and automation of reconciliation are implementation-specific.

Reporting

Reconciliation reports may include:

• Total operations reviewed.
• Matched records.
• Unmatched records.
• Amount differences.
• Processing exceptions.
• Outstanding investigations.
• Resolution history.

These reports support financial operations, monitoring, and audit processes.

Best practices

• Treat the ledger as the authoritative internal accounting record.
• Preserve provider and ledger identifiers.
• Compare balances only when their definitions and effective times are compatible.
• Distinguish settlement delays from actual discrepancies.
• Prevent duplicate financial postings.
• Maintain traceable exception handling.
• Use supported accounting operations for corrections.
• Protect financial and customer information.
• Retain appropriate reconciliation records.

Next steps

Continue with the Security & Operations documentation:

• Authentication & Permissions
• Idempotency
• Best Practices