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Reconciliation Pattern

Forex Reconciliation

Match foreign currency receipts with exchange rate variance isolation

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What this pattern solves

Indian exporters, IT services firms, and businesses with overseas clients receive foreign currency payments that are converted to INR at the bank's day-rate before crediting to the account. The INR receipt never exactly equals the invoiced amount — the difference is the forex variance. Without a structured reconciliation process, this variance is either ignored (leading to P&L distortions) or treated as a payment shortfall (generating false outstanding amounts). The Forex Reconciliation pattern converts foreign currency invoices to INR at the transaction rate, matches the INR receipt, and isolates the exchange gain or loss as a named variance category.

Use this pattern when:

  • You raise invoices in USD, GBP, EUR, or other foreign currencies
  • Payments arrive as INR bank credits (converted by the correspondent bank)
  • You need to track realised exchange gains and losses per invoice
  • You need FEMA-compliant BRC (Bank Realisation Certificate) reconciliation
  • You process import payments and need to reconcile advance vs final settlement

How it works in TransactIG

01

Ingest foreign currency invoice

Invoice amount in foreign currency, expected payment date, and SWIFT/FIRC reference are ingested from the ERP.

02

Convert to INR at transaction rate

The bank credit is received in INR. TransactIG reads the transaction exchange rate from the bank statement or FIRC and computes the INR equivalent of the invoice at that rate.

03

Match and isolate forex variance

The INR bank credit is matched against the INR-converted invoice amount. The difference (if any) is classified as exchange gain or exchange loss — not as a payment shortfall.

Matching rules

INR equivalent match
INR receipt = invoice FCY × transaction exchange rate. Tolerance: ₹500.
FIRC reference match
SWIFT/FIRC reference on bank credit linked to invoice.
Advance + balance match
Advance payment + balance receipt combined to match total invoice.

Variance taxonomy

V
Exchange gain
INR receipt exceeds INR equivalent at invoice rate.
V
Exchange loss
INR receipt is less than INR equivalent at invoice rate.
V
Payment shortfall
Client remitted less than the invoice amount (after exchange rate adjustment).
V
Bank charges
Correspondent bank charges deducted before credit.

Frequently asked questions

Does TransactIG handle multi-currency invoicing (USD + EUR in the same entity)?

Yes. Each invoice can be denominated in any supported foreign currency. Exchange rates are applied per transaction.

Can TransactIG help with FEMA compliance documentation?

TransactIG produces reconciliation reports that link each foreign receipt to the corresponding invoice and FIRC reference — providing the documentation base for BRC filing and FEMA compliance.

See the Forex Reconciliation pattern in action

Terra Insight will run a live TransactIG demo using this matching pattern on data from your industry vertical.

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