Reconciliation strategies

Reconciliation strategies allow you to outline how transactions are distributed between both records. Sometimes, one transaction in the internal record can be split into 2 or more transactions in the external record and vice versa.

These strategies help maintain the integrity of financial data by aligning transactions with corresponding payments, thus preventing discrepancies and ensuring that financial statements are accurate and reliable.

In this guide, we will explore three common reconciliation strategies: One-to-One, One-to-Many, and Many-to-One. Each strategy serves specific purposes and suits different financial workflows.

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1. One-to-one

The One-to-One reconciliation strategy (one_to_one) involves a direct match between an internal transaction record and an external transaction record. It is the simplest form of reconciliation, ensuring that the amount in your Blnk Ledger matches exactly with the corresponding amount in an external system.

{
  "upload_id": "upload_8c700d1b-09c0-4ef4-9ab1-a0decf3d0aa3",
  "strategy": "one_to_one",
  "dry_run": false,
  "matching_rule_ids": [
    "rule_890bdbc4-467f-4670-8424-5667e41daf29",
    "rule_a1b2c3d4-5678-90ef-ghij-klmnopqrstuv"
  ]
}

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2. One-to-many

The One-to-Many reconciliation strategy (one_to_many) is used when one external transaction record represents multiple internal transaction records. This strategy is useful for batch payments or situations where a single transaction needs to be matched with multiple internal transaction records in your Blnk Ledger.

This strategy is commonly used to reconcile transactions that settle in groups, e.g., a credit of $100 in your bank statement, may be recorded as $90 to the customer, and $10 for fees in your Blnk Ledger.

{
  "upload_id": "upload_8c700d1b-09c0-4ef4-9ab1-a0decf3d0aa3",
  "strategy": "one_to_many",
  "dry_run": false,
  "matching_rule_ids": [
    "rule_890bdbc4-467f-4670-8424-5667e41daf29",
    "rule_a1b2c3d4-5678-90ef-ghij-klmnopqrstuv"
  ]
}

For this to work:

• The matching internal transaction records must be equal to the external transaction record.
• You also need to specify how the internal transaction records must be grouped.

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3. Many-to-one

The Many-to-One reconciliation strategy (many_to_one) is employed when multiple external transaction records make up one internal transaction record. It is effective for cases such as installment payments, where several smaller transactions in your external records over time need to be reconciled with a single larger internal transaction record.

This strategy is commonly used to reconcile transactions that settle in groups, e.g., a bank transfer of $100 may settle as $10 and $90 in your external records.

{
  "upload_id": "upload_8c700d1b-09c0-4ef4-9ab1-a0decf3d0aa3",
  "strategy": "many_to_one",
  "dry_run": false,
  "matching_rule_ids": [
    "rule_890bdbc4-467f-4670-8424-5667e41daf29",
    "rule_a1b2c3d4-5678-90ef-ghij-klmnopqrstuv"
  ]
}

For this to work:

• The matching external transaction records must be equal to the internal transaction record.

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Grouping criteria

Grouping is crucial for complex reconciliation strategies, particularly for one-to-many or many-to-one reconciliations. We use grouping to define a way for identifying multiple similar records during reconciliation.

Proper grouping ensures that transactions are matched accurately and efficiently. Grouping criteria define how transactions should be categorized before they are reconciled.

Depending on the reconciliation strategy being employed, the grouping criteria may vary. For one-to-many, you can group similar transactions by parent_transaction, description, or reference WHILE for many-to-one, you can group only by description.

{
  "grouping_criteria": "reference"
}

The above example for a one-to-many reconciliation groups internal records by their reference numbers.

For many-to-one transactions, you can include a key or value to the description of the transactions to make it easy to identify similar transactions and group them together as one. For example, if a user makes a transfer, you can pass bankTransfer-209018 in the description so that all external records with the description can be grouped together to be matched to an internal record.

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