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Accounts receivable reconciliation is a type of bookkeeping task that calls for carefully comparing the hard copy documentation that is related to receivables transactions with the entries that are actually made in the accounting records. This approach helps to identify any discrepancies that may be present, and correct them as part of an overall reconciliation of the accounting records. The frequency with which this type of activity takes place will vary from one business to another, but is generally conducted on a monthly or at least a quarterly basis.
Like any type of accounting reconciliation, the accounts receivable reconciliation has the goal of locating any issues that may be causing the data shown in the accounting records to not balance with other documentation. This will often mean going back to all documents relevant to the receivables for the period of time under consideration. For example, the reconciliation may involve comparing bank deposits or receivables for specific dates to make sure the amount deposited is the same as the amount posted to customer invoices. At the same time, the process will also call for making sure the payments on those invoices match the amounts shown on the customer account in the receivables.
In many instances, an accounts receivable reconciliation helps to identify common errors that may occur when posting payments received from clients or even preparing bank deposits of those receivables. By comparing the support documentation closely, it is possible to determine if numbers were transposed or if a payment was not posted to the right outstanding invoice. Many of the issues identified during this type of reconciliation can be corrected with little effort, resulting in receivables that are completely accurate and fully reconciled.
Choosing to conduct an accounts receivable reconciliation on a regular basis can greatly benefit the company, with some businesses choosing to perform a daily or weekly reconciliation. Even with a small business, taking the time to conduct the reconciliation every month or so will save a lot of time and resources, while also making it possible to identify any questionable bookkeeping processes that may be taking place. Assuming the reconciliation is done several times each calendar year, it is often easier to note any discrepancies, research them, and finally reconcile them with relatively little trouble. Conducting an accounts receivable reconciliation just before an audit is often a good idea, since the process means books that are error-free, something that will help the audit to be simple and easily managed.