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RECONCILIATION GLOSSARY

The same term, the same meaning on both sides.

Forty terms, each with a worked example. From value dates to FIFO application, reverse balances to external confirmation.

Reconciliation speaks its own language, and the same word rarely means the same thing on both sides of a statement. This glossary defines the terms you meet in an account statement, a bank line or an audit question, together with the difference each one creates.

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Method3
Ledger and accounts6
Matching7
Sources of difference5
Bank3
Foreign currency2
Documents and letters3
E-documents3
Regulation3
Audit2
Anomalies3

Method

3 terms

Three-source reconciliation: Three-source reconciliation compares ledger or ERP records, the bank statement and e-invoice data in a single table. The point is that when two sources disagree, a third one decides which of them is right.
Period-end close: The period-end close is the process of completing a month, quarter or year in the accounting records, locking the period and producing financial statements. Bank, supplier and customer reconciliations are expected to be finished before the books are locked.
Consolidation elimination: A consolidation elimination removes intercompany balances and transactions when group companies are combined into one set of financial statements, so that receivables, payables, sales and unrealised profit are not counted twice. What remains is business done with third parties.

Ledger and accounts

6 terms

Open item: An open item is an invoice, payment, debit note or credit note that has not yet been fully cleared by an offsetting entry. An account balance is simply the sum of these lines, and reconciliation compares the lines themselves rather than the balance.
Reverse balance: A reverse balance is an account carrying the opposite sign to the one its nature implies: a customer account in credit, or a supplier account in debit. It is not a verdict in itself but a question the underlying line items have to answer: a prepayment, a credit note, or a payment posted to the wrong counterparty.
Trial balance: A trial balance lists every account in the ledger for a period with its debit total, credit total and closing balance. It proves that debits equal credits; it does not show which invoice was settled by which payment.
Subsidiary ledger: A subsidiary ledger is the detailed record behind a control account, listing every transaction with its date, document number, description and amount. The trial balance gives you the total; the subsidiary ledger shows which lines produced it.
Receivables aging: Receivables aging is the report that sorts open receivables into buckets by how long they have been outstanding, typically not yet due, 1-30 days, 31-60, 61-90 and over 90 days. Its purpose is to make collection risk visible per customer and per item.
Current account: A current account — the customer or supplier subledger account, called cari hesap in Türkiye — is the ledger account that holds every debit and credit movement with a single counterparty, in date order. Its balance shows whether you are net receivable from, or net payable to, that party, and it is the account a local entity is asked to evidence when the group closes.

Matching

7 terms

FIFO application: FIFO application is the rule of allocating a payment that carries no invoice reference to the oldest open invoices first, in date order. Invoices close in sequence while the amount lasts, and the invoice where it runs out stays partly open.
Partial payment: A partial payment settles part of an invoice rather than all of it. The invoice does not close: the paid portion is applied, and the invoice stays open for the remainder.
Residual item: A residual item is the amount left over once a payment has been matched against an invoice, carried forward as a separate open item. It lives on in its own right until someone closes it.
Clearing: Clearing is the act of pairing a debit item with a credit item inside a single ledger so that both are marked as closed. It happens entirely within your own books and consults no outside source.
Matching tolerance: Matching tolerance is the largest gap allowed between two records before they can be treated as the same transaction. It is defined in cents on the amount and in days on the date, and it decides how many lines arrive as a proposal instead of as a manual review item.
Open invoice: An open invoice is an issued invoice that has not been fully settled by a payment applied against it; even where the money has been received, the invoice stays open in the ledger until that payment is applied to it. The balance on a customer or supplier account is the sum of its open invoices, less advances and credit notes.
Cash application: Cash application is the work of deciding which invoices an incoming payment settles, and for what amount, and then applying it against the open items in the ledger. It is not the same as recording the receipt: the money can be booked while the invoice it belongs to is still unknown.

Sources of difference

5 terms

Reconciliation difference: A reconciliation difference is the gap between the balance or the movements that two parties, or two data sources, show for the same account. The difference is not an error in itself; it is an unexplained question until you can trace it to specific lines.
Advance offset: An advance offset is the entry that applies a prepayment, received or made before delivery, against the invoice it belongs to. Until the offset is booked, the advance and the invoice sit apart in the ledger and the account balance looks larger than the amount actually owed.
VAT withholding: VAT withholding is an arrangement in which a defined share of the VAT on an invoice is not paid to the seller at all, but declared and paid directly to the tax office by the buyer; on some supplies the whole of the VAT is handled this way. The invoice therefore carries two totals: the full document value and the amount the seller is entitled to collect.
Credit note: A credit note is a document that reverses all or part of an invoice that has already been issued. It creates an opposite entry on the account and reduces the amount still open against the original invoice.
Netting: Netting is the practice of offsetting what you owe a counterparty against what that counterparty owes you, leaving a single net amount to settle. The one movement that results conceals the dozens of documents behind it.

Bank

3 terms

Value date: A value date is the date on which a bank treats a movement as effective for balance and interest purposes. It does not have to be the day the transaction was executed: a transfer can be sent one day and carry the next business day as its value date.
Bank statement: A bank statement is the bank's own dated record of every credit and debit on an account over a period. In reconciliation it is an outside source the company cannot edit, and the only one that records what cash actually did.
Unidentified transfer: An unidentified transfer is an incoming payment that reaches the bank statement without enough information to say which customer sent it or which invoice it pays. The cash is in the account, but because it cannot be applied, the receivable stays open in the ledger.

Foreign currency

2 terms

Exchange difference: An exchange difference is the local-currency gap created when the rate moves between the date a foreign-currency receivable or payable is booked and the date it is settled or revalued. The foreign-currency amount never changes, yet the two sides can carry the same invoice at different local-currency balances.
Central bank buying rate: The central bank buying rate is the account-based buying line in the indicative foreign exchange table that the Central Bank of the Republic of Türkiye publishes on business days. Foreign currency amounts are usually converted into Turkish lira using this rate.

Documents and letters

3 terms

Account statement: An account statement lists every transaction with a single customer or supplier in date order, running from the opening balance to the closing balance. It is the document the two sides actually compare when they reconcile.
Confirmation letter: A confirmation letter is the document sent to a counterparty asking them to confirm, in writing, the current account balance as of a stated cut-off date. Also called a reconciliation letter, its purpose is to evidence that two sets of books meet at the same figure.
Blank confirmation request: A blank confirmation request is a confirmation in which no amount is stated, so the counterparty has to fill in the balance from its own records. The point is to obtain independent data without showing your own figure first.

E-documents

3 terms

e-Invoice: An e-invoice, known in Türkiye as e-Fatura, is an invoice issued to a counterparty that is also registered in the national e-invoicing system and delivered through that system rather than by email or post. It is not a scanned paper invoice: issuing, delivery and storage are electronic end to end.
e-Archive: An e-archive invoice, called e-Arşiv in Türkiye, is the electronic invoice issued to buyers who are not registered in the national e-invoicing system. It is created and stored electronically and reaches the buyer as an electronic copy or a printout.
e-Ledger: An e-ledger, known in Türkiye as e-Defter, is the statutory journal and general ledger kept in the electronic format prescribed by the tax administration, with a seal generated for each period and filed with the administration for approval. It is the local statutory book, not the group ledger you report in: the content of the books is unchanged, what changes is how they are produced, signed, sealed and stored.

Regulation

3 terms

TTK Article 94: Article 94 of the Turkish Commercial Code (TTK) provides that a party receiving the statement showing the balance struck when a current account is closed at the end of a period is deemed to have accepted that balance if it raises no objection within one month of receipt. The objection has to travel through one of the formal channels the article lists, and the mechanism depends on a written current-account contract between the parties.
Cross-examination: Cross-examination is the verification of an invoice against the books and records of the counterparty that issued or received it. In Türkiye it is carried out mainly by a sworn-in certified public accountant (YMM) as part of the certification report supporting a VAT refund claim.
Form Ba-Bs: Form Ba and Form Bs were Turkish monthly filings in which taxpayers reported purchases and sales of goods and services above a set threshold to the tax administration. They were abolished from the September 2024 period by General Communique No. 565 under the Tax Procedure Law (Official Gazette 25.09.2024, No. 32673).

Audit

2 terms

External confirmation: External confirmation is the verification of a balance or transaction through a written reply obtained directly from a party outside the company, instead of from the company's own books. Because the evidence never passes through the audited entity, it counts among the strongest forms of audit evidence.
Audit trail: An audit trail is the unbroken record of the path an amount travelled from source document to its current state — which document became which journal entry, which entry reached which line — together with every intervention on that path, each with a user, a timestamp and a stated reason. In reconciliation it is what lets you prove months later why two lines were matched.

Anomalies

3 terms

Duplicate payment: A duplicate payment is the same obligation paid twice: cash leaves the bank a second time against an invoice or a liability that was already settled. It rarely reads as an error, because the second outflow is applied to the next open item and nothing is left visibly unpaid.
Phantom debt: Phantom debt is a payable or receivable that still shows as open in the ledger even though it has in fact been settled. The money moved and the invoice was covered; what is missing is the record that ties the payment to the right invoice.
Financial anomaly: A financial anomaly is an entry that falls outside the expected pattern and has no ready explanation: a missing invoice, a duplicated record, an amount unlike anything else on the account, or a balance difference nobody can trace. It may be an error or something deliberate, and only investigation separates the two.

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