Customer Account Reconciliation

Finalert reconciles the account line by line and produces a statement both sides accept. Unapplied cash is matched, short pays are identified and categorized, deductions and chargebacks are supported or challenged, credit memos are traced, and duplicates are removed. What you get back is a clean balance and a documented reason behind every single adjustment.

A reconciliation strips that layer out. We start from the customer's remittance detail and their own statement, work through the account transaction by transaction, and separate what is genuinely owed from what is an accounting artifact. The result is a reconciled position, a list of adjustments for your approval, and a clean statement you can send without a caveat attached.

Finalert reconciles customer accounts in two directions. The first is internal: the accounts receivable subledger against the general ledger control account, so the total your aging shows is the total your balance sheet shows. Differences here are usually posting errors, journal entries made directly to the control account, cut-off timing around month end, or write-offs recorded in one place and not the other. We identify each one, document it, and give your controller an adjusting entry to approve rather than posting anything ourselves.

The second direction is external: your account against the customer's. Large customers hold their own open payables file, and it rarely matches yours. We request their statement or open items report, align it to your ledger invoice by invoice, then classify every difference. Invoices they never received. Invoices they are holding pending a purchase order number. Payments they made that you have not applied. Credits they have taken that you never issued. Each difference goes onto a schedule with an owner and an action against it.

What the differences usually are

Unapplied and misapplied cash is the most common cause. A customer pays five invoices with one check and no remittance, the cash lands as a payment on account, and five invoices stay open. Or the cash was applied to the wrong invoice, which means one invoice looks paid while another ages quietly. We rebuild the application from the remittance advice, the payment amount, the discount taken and the invoice history, then hand you the reapplications to approve.

Short pays, deductions and chargebacks come next. A customer pays most of an invoice and deducts the rest for freight, a promotional allowance, a pricing difference or damage in transit. Unless somebody matches the deduction to a reason and to your own records, the residue sits in the aging forever. We categorize each deduction, pull the supporting documentation, and split them into three piles: valid and write off, invalid and rebill, and unclear and query with the customer. Duplicate invoices and unapplied credit memos are cleared the same way.

Working the clean-up and keeping it clean

Old balances need a decision, not another month of aging. We produce a schedule of every item over your agreed age threshold with the evidence behind it and a recommendation: collectable and worth chasing, disputed and needing a commercial answer from your sales team, or genuinely uncollectable and needing a write-off approval. Nothing is written off by us. Your controller approves each adjustment, and the approved list then becomes the journal and the audit support in one document.

Once the account is reconciled we agree a routine that stops it drifting again: a monthly subledger to ledger tie-out, a quarterly statement exchange with your major customers, and a rule that cash is applied within a set number of days rather than parked. The limits are worth stating. We prepare and document. We do not write off balances, set credit policy, issue audit or attest opinions, sign tax filings, give legal advice, or act as your accountant of record. Collections calls and daily cash application are separate services.