Accounts receivable reconciliation: meaning and process

The AR subledger contains customer invoices, receipts, credits, adjustments, and remaining balances. The general ledger usually contains a receivables control account. A period-end process may need to tie the subledger total to that control account and investigate differences.

Aging reports organize open balances by age, while payment application explains which receipts reduced which invoices. Unapplied cash and customer credits need separate review.

Payment matching compares incoming receipts with open invoice balances and creates proposed applications. AR reconciliation also considers completeness, posting, cutoff, credit memos, write-offs, foreign currency, and the relationship between subsidiary and general ledger records.

A matching tool can prepare evidence and exceptions, but accounting judgment and final ledger review remain with the business.

Confirm the period and refresh source reports. Match posted customer receipts, review unapplied cash and negative customer balances, investigate old or unusual items, and compare the AR subledger to the control account.

Document reconciling items with owners and expected resolution dates. Verify subsequent activity where it supports the cutoff conclusion.

Timing differences, duplicate imports, receipts posted to the wrong customer, credits not applied, write-offs, manual journal entries to the control account, foreign currency changes, and stale exports can all create disagreement.

Work from source identifiers and totals. Changing individual records until the reports agree can hide the cause and weaken the audit trail.

Accounts receivable concerns amounts customers owe the business. Accounts payable concerns amounts the business owes vendors. Incoming customer payment matching is an AR workflow. Supplier invoice matching is an AP workflow.

Using the correct terms helps teams choose the right source records, ownership, and controls.