Blog Post
How to Fix Discrepancies in Your AR Reconciliation
It's month-end. The General Ledger says you are owed $1.5 million. Your Accounts Receivable sub-ledger says $1.48 million. That $20,000 variance is keeping you from closing the books. AR reconciliation discrepancies are a common headache, but they can be solved systematically. Here is how to track down the errors and fix them for good.
Step 1: Check for "Timing Differences"
The most innocent culprit is time. Did you post a payment on January 31st in the bank ledger but on February 1st in the AR sub-ledger?
The Fix: Run both reports with the exact same cut-off date. Look for transactions near the beginning and end of the month.
Step 2: Hunt Down "Unapplied Cash"
Sometimes, cash is received but not applied to a customer invoice. This money sits in a "Suspense" or "Unapplied Cash" account in the GL, but it won't show up as reducing the customer's balance in the sub-ledger until it is applied.
The Fix: Review your suspense accounts. If you find money there, match it to the open invoice immediately. (See our guide on Automating AR Matching).
Step 3: Analyze "Short Payments"
A customer owes $1,000 but pays $950 because they claimed a $50 discount for damaged goods. If the AR clerk just applies the $950, the invoice remains open with a $50 balance. Over time, these small balances add up to a large discrepancy.
The Fix: Adopt a clear "write-off" policy for small amounts (e.g., under $10) or create a "Dispute" deduction for larger amounts to clear the invoice while the issue is investigated.
Preventing Future Errors with Automation
Chasing these errors manually is reactive. The best way to fix discrepancies is to prevent them.
Reconwizz automates the reconciliation between your GL and AR sub-ledger daily. It flags timing differences, identifies unapplied cash, and suggests write-offs for short payments automatically.