Accounting technology / Glossary / Transaction matching

What is transaction matching?

Definition

Transaction matching is pairing records from two sources that describe the same event, such as a bank line and a ledger entry, a payment and an invoice, or two sides of an intercompany transaction, using amount, date, reference and counterparty. Matched items are cleared; unmatched items are left for someone to investigate. It is the core task inside most reconciliations.

Also calledauto-matchingtransaction reconciliation

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Matches on: Amount, date, reference, counterparty
Patterns: One-to-one, one-to-many, many-to-many
Category: Financial close

How transaction matching works

Software applies rules in order of confidence. Exact rules match on amount, date and reference together. Looser rules allow a date window, a tolerance on amount, or a reference found inside free text. One-to-many and many-to-many rules handle a single payment covering several invoices, or one bank deposit made up of many card settlements. Remaining items go to a queue with suggested matches. Machine learning is now used to suggest matches from how people resolved similar items before, and to read remittance emails and PDF statements for references. The match rate, the share of items cleared automatically, is the usual measure. BlackLine and FloQast run matching for the close; Stacks AI and Billow AI use AI agents for it; Stuut and Monk match customer payments to invoices.

Common questions

What is a one-to-many match?+

A single item on one side matched to several on the other, such as one customer payment covering five invoices, or one bank deposit made up of many card transactions. Rules sum the group and compare the total.

What is a match rate?+

The share of transactions matched automatically without anyone reviewing them. It rises as rules are tuned and reference data improves, and is the main measure of how much a matching tool saves.

What happens to unmatched transactions?+

They become exceptions for review. Someone finds the missing entry, corrects an error or posts an adjustment, and items left unmatched at period-end appear as reconciling items with an explanation.