Accounts receivable reconciliation

What is accounts receivable reconciliation?

Accounts receivable reconciliation is the systematic process of verifying that customer payment records match bank deposits, internal accounting records, and customer account statements. This critical financial control ensures accuracy in billing, collections, and financial reporting while maintaining strong customer relationships.

Key reconciliation components

The reconciliation process involves matching:

• Customer payments to invoices
• Bank deposits to internal records
• Credit memos and adjustments
• Unapplied payments
• Disputed charges

Essential procedures

Payment verification

Daily reconciliation of received payments against bank deposits ensures all customer payments are properly credited and recorded. This process helps identify missing payments or posting errors quickly.

Account analysis

Regular review of customer accounts helps identify discrepancies between customer records and internal systems, ensuring accurate billing and proper payment application.

Balance confirmation

Periodic verification of customer account balances through statements and direct communication helps maintain accurate records and strong customer relationships.

Common reconciliation challenges

Organizations often encounter:
• Timing differences between systems
• Incomplete payment information
• Complex billing arrangements
• Volume of transactions
• Payment application errors

Best practices for success

Effective reconciliation requires:
• Regular reconciliation schedules
• Standardized procedures
• Clear documentation
• Proper segregation of duties
• Systematic review processes

Accounts receivable reconciliation serves as a fundamental control for maintaining accurate financial records and ensuring proper revenue recognition while supporting strong customer relationships through accurate billing and payment processing.