A glossary of recurring receivables
Most of the difficulty in talking about receivables is that four or five words are used for the same thing, and the same word is used for four or five things. A payment is described as matched, then allocated, then reconciled, then settled, as though those were stages of enthusiasm rather than distinct financial facts.
They are distinct, and the distinctions are the ones that decide whether an organization can close a period. These are the definitions Zetu writes to, in the order money actually moves through them.
Why the vocabulary is worth the trouble
An organization that cannot separate money received from money allocated cannot tell its board what it collected. An organization that cannot separate matched from reconciled will trust a payment that only one of its systems has ever seen.
Neither of those is a language problem in the end. They are both a reporting problem wearing a language problem's clothes.
Obligation — What someone is expected to pay, why, and when.
The fact underneath an invoice. An obligation exists because of a relationship and a rule — annual dues because this person is a member, a term's fees because this child is enrolled — and it exists whether or not a document has been generated for it. Obligations can be partly fulfilled, rescheduled, disputed or waived without their history being rewritten.
Not to be confused with: An invoice, which is a document announcing an obligation. The invoice can be cancelled and reissued; the obligation is the thing that persists.
Expected — The total of obligations due in a period.
What should arrive, computed from obligations rather than from invoices sent. The distinction matters at the edges: an obligation nobody managed to bill is still expected, and a system that counts invoices will not see it.
Received — Money that actually arrived.
The sum of payments a rail has reported and the organization can see. Received says nothing at all about who sent it or what it was for — that is the entire gap this product exists to close.
Not to be confused with: Revenue. Money can arrive that belongs to nobody yet, that duplicates an earlier payment, or that has to go back.
Allocated — Received money assigned to specific obligations.
The act of saying which obligations a payment settles, and by how much. One payment can be allocated across several obligations; one obligation can take several allocations, plus a credit and a waiver. Allocation is the operation; it is what a person approves when the evidence is not conclusive.
Not to be confused with: Received. Money received and money correctly allocated are two different numbers, and an organization that reports only the first cannot close a period.
Unallocated — Money that arrived and has nowhere to go yet.
A payment that has been received but cannot yet be attributed to an obligation — a wrong reference, an unrecognized payer, an amount matching nothing. Held in suspense rather than guessed at, and reported as its own figure rather than netted away.
Suspense — Where unallocated money is held, on the record.
A holding position for money that is genuinely the organization's but not yet attributable. Putting a payment in suspense is a complete, correct outcome with its own audit trail — not a failure state, and not a queue to be emptied by guessing.
Matched — A proposed allocation, with evidence and a confidence.
A candidate answer to 'whose payment is this?'. A match is deterministic when a rule settles it outright — an exact reference, a registered paying number, an amount that can only be one obligation. It is probabilistic when it is inferred from evidence, in which case Zetu proposes and a person decides.
Not to be confused with: Allocated. A match is a suggestion; an allocation is a posted decision with a name and a timestamp against it.
Reconciled — Independent records agree about what happened.
The state in which the sources that should say the same thing do: the obligation, the payment callback, the provider's own record, the bank line and the allocation. Reconciliation is a comparison across sources, which is why it can fail even when every individual number looks right.
Not to be confused with: Matched. Matching connects a payment to an obligation. Reconciling checks that every record of that event agrees — a payment on a bank statement with no callback is a finding, not a silence.
Settled — An obligation is fully discharged.
The obligation's own end state: enough has been allocated, waived or credited against it that nothing remains owed. Settlement is a property of the obligation, where allocation is a property of the payment.
Outstanding — Obligations that remain collectible.
What is still owed after everything received has been allocated. Deliberately excludes money sitting in suspense that probably belongs to the account — an account with a payment in review is not a delinquent account, and chasing it is the most common expensive mistake in this whole process.
Standing — What the balance means for this relationship.
The operating interpretation of an account, rather than a comparison against zero. Two members owing the same amount can need opposite treatment: one inside a grace period, the other long overdue with no contact. Standing is what entitlements and collections both read from.
Entitlement — What an account can access because of its standing.
Voting rights, facility access, a service tier, member pricing, certification. Usually resolved from standing and policy — and sometimes not tied to payment at all, for honorary members, scholarship holders and staff.
The one distinction to take away
If only one of these survives the read, make it this: received, allocated and reconciled are three different numbers about the same money, and they are almost never equal.
Received is what the rails reported. Allocated is how much of it you can say belongs somewhere specific. Reconciled is how much of it every independent record agrees about. The gaps between them are not rounding — they are the work.