How to Reconcile Accounts Receivable (AR Reconciliation Guide)

Accounts receivable reconciliation compares two numbers that should always be equal: the total of your AR subledger (individual customer invoice balances) and the AR control account balance in your general ledger. When they differ, a transaction has been posted incorrectly somewhere — and your financial statements are wrong until you find it.

The Two Records You Are Comparing

• AR subledger — the detail: a list of every open invoice, grouped by customer, with amounts and due dates. Run this as an "Aged Receivables" report from your invoicing system.
• AR control account — the summary: the single line in your general ledger that shows the total amount owed by all customers combined.

Step-by-Step AR Reconciliation Process

1. Set your reconciliation date — typically the last day of the month
2. Run an Aged AR report from your invoicing or billing system as of that date
3. Pull the AR control account closing balance from your general ledger as of the same date
4. Compare the two totals — they must match to the cent
5. If they differ, export both to CSV and compare line by line to find the gap
6. Make the correcting entry once you have identified the cause
7. Re-run both reports to confirm they now agree

Most Common Causes of AR Reconciliation Differences

1. Journal entries posted directly to the AR control account

Any journal entry that debits or credits the AR control account directly — instead of going through the subledger — creates a difference. These entries update the GL but not the customer balances. The fix: find the journal entry, reverse it, and re-enter it through the proper invoicing or payment workflow.

2. Payments applied to the wrong customer

A payment recorded as received from Customer A but actually belonging to Customer B will leave Customer A with a false open balance and Customer B overpaid. The fix: unapply the payment and re-apply to the correct customer.

3. Credit notes not posted

A credit memo issued in your invoicing system but not posted to the GL reduces the AR subledger total without reducing the GL — creating a positive difference in the GL.

4. Timing differences across periods

An invoice dated December 31 that was entered on January 2 will appear in the GL for December (accrual basis) but in the subledger only from January. This resolves on its own in the next period but creates a reconciliation difference at month-end.

AR Reconciliation Checklist

1. ☐ Aged AR report exported as of month-end date
2. ☐ AR GL control account balance pulled for same date
3. ☐ Both totals compared — difference noted
4. ☐ All direct GL journal entries to AR reviewed
5. ☐ Payments with "unapplied" status investigated
6. ☐ Credit notes cross-checked between subledger and GL
7. ☐ Prior-period timing differences identified and carried forward
8. ☐ Correcting entries posted and reconciliation re-run
9. ☐ Final reconciliation saved as documentation