What is a 'backend reconciliation'?

Backend reconciliation refers to the process of aligning contract performance with actual costs incurred during the execution of the contract. This involves reviewing and verifying the financial aspects of the contract after work has been completed, ensuring that the payments made correspond to the work and materials provided. The purpose of this reconciliation is to identify any discrepancies between what was agreed upon in the contract and what has actually occurred in terms of costs and performance.

This process is crucial for effective contract administration, as it helps to maintain control over financial resources, supports accurate reporting, and facilitates decision-making based on the project’s financial health. Successfully performing backend reconciliation can assist in ensuring that both parties fulfill their obligations and that any necessary adjustments can be made to address variances between expected and actual performance.