Accounting
Customer and Supplier Account Reconciliation Guide
A useful reconciliation confirms the balance, identifies the cause of each difference and assigns a clear action before period close.
Key takeaways
- A balance confirmation is only the start; each difference needs a reason and owner.
- Invoices, payments, returns, FX and offsets should use separate difference codes.
- Complete material reconciliations before period close.
- Unresolved differences distort ageing, cash forecasts and financial statements.
- Reconciliation confirms the transaction chain, not only the closing balance.
- Every difference needs an owner, age, cause and closure evidence.
Important information
This article provides general information and is not legal, tax or investment advice. The outcome depends on the facts, the parties and current legislation.
Define scope and cut-off
Set the legal entity, counterparty, currency, balance date and accounts covered. Extract transactions after posting is frozen or identify the exact report version used.
Compare transaction, not only total
- Invoice and credit-note references
- Bank payments and value dates
- Returns, rebates and marketplace deductions
- Foreign-exchange and withholding differences
- Offsets between customer and supplier positions
Classify every difference
Use reason codes such as timing, missing invoice, duplicate, unallocated payment, FX, disputed item or master-data error. Assign an owner and target date; do not carry 'to be checked' indefinitely.
Protect the close
Prioritise high-value, old and unusual balances. Reconcile the final agreed position to the ledger and keep confirmation evidence. Consider provisions or write-off procedures for unresolved exposures.
Measure the process
- Percentage of material balances confirmed
- Number and value of open differences
- Average days to resolve
- Repeat causes by team or system
Resolving a supplier difference
If the supplier shows TRY 450,000 receivable while the company shows TRY 390,000 payable, do not post a TRY 60,000 plug. Compare invoices, returns, payments, offsets and FX items by document reference. The difference may be an invoice not received, a duplicated payment or a cut-off item.
Only post a correction after the underlying event and document are verified. The reconciliation record should show opening balance, movements, closing balance, difference category, owner and closure date so the same item does not roll forward indefinitely.
Monthly reconciliation workflow
- Clean customer and supplier master data.
- Separate invoices, returns, payments, offsets and FX entries.
- Match by document number, amount and date.
- Classify timing, missing, duplicate and disputed items.
- Assign an owner and deadline to each open item.
- Archive confirmation and closure evidence.
Red flags for management
- Dormant or reverse-balance accounts
- Duplicate invoice references
- Bank payments not allocated to an account
- Large round-number journals without support
- Differences older than one reporting cycle
Age the reconciled balance
| Age | Question | Action |
|---|---|---|
| Not due | Invoice and delivery accepted? | Confirm expected date |
| 1–30 overdue | Document or operating dispute? | Assign owner |
| 31–90 | Credit risk increasing? | Collection plan and impairment review |
| 90+ | Legal/commercial escalation? | Management, provision and counsel |
Closing evidence
- Counterparty confirmation or dispute
- Transaction-level difference and reason
- Correction reference
- Owner and resolution date
- Explanation for items carried forward
Frequently asked questions
Is a signed balance confirmation enough?
It confirms a position but does not explain individual differences or replace supporting invoices, payments and contracts.
How often should reconciliation be performed?
Material or high-volume accounts benefit from monthly reconciliation; lower-risk balances may follow a risk-based schedule.
Does no reply to a confirmation prove the balance?
No. Use alternative evidence such as subsequent payment, invoices, delivery records and the counterparty statement, and report the lack of confirmation as a risk.
Can small differences be written off automatically?
A documented materiality policy may support treatment, but cause, evidence and tax effect should be reviewed before a bulk write-off.
Official sources
Legislation last reviewed: 1 August 2026
Mikail Ege
Certified Public Accountant · SMMM
Mikail Ege works across accounting, tax, financial reporting, financial advisory, fintech and payment institutions.
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