What is a true up?

A true-up is a term commonly used in finance and accounting to refer to the process of reconciling financial records or reports to ensure accuracy and completeness. It is often done at the end of a specific period, such as a fiscal year or a specific project, to compare the actual results with the estimated or budgeted results.

True-up adjustments are typically made to correct any discrepancies between the estimated or projected numbers and the actual figures. This can involve adjusting revenue, expenses, or other financial metrics to reflect the true financial position of the company.

True-ups are important for ensuring the integrity of financial reporting and decision-making, as they provide a clear and accurate picture of the company's financial performance. They help to identify any errors, inconsistencies, or variances in the financial records and allow for necessary adjustments to be made.

Overall, a true-up is a crucial part of the financial management process, ensuring that financial statements are accurate and reliable for stakeholders and decision-makers.