What is true-up?

True-up refers to the process of reconciling or adjusting the difference between estimates and actuals. In the context of business or finance, true-up usually occurs at the end of a specified period, such as a fiscal year or a contract term. The purpose of true-up is to ensure that all transactions, financial statements, or performance metrics are accurate, complete, and consistent with the agreed terms and conditions.

True-up can apply to various aspects of business operations, such as budgeting, forecasting, accounting, taxation, and performance measurement. For example, in budgeting, true-up may involve adjusting the initial budget based on the actual results of the period or updating the assumptions and variables used in the budgeting process. In accounting, true-up may involve making adjustments to the general ledger accounts or balance sheet items to reflect the correct values based on the actual transactions or events.

True-up can be complex and time-consuming, as it may involve gathering and analyzing data, reviewing policies and procedures, and communicating with stakeholders. However, it is essential for ensuring the accuracy and integrity of financial and operational information, as well as for complying with regulatory requirements and contractual obligations.