Debtors Creditors Reconciliation

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Debtors Creditors Reconciliation

For the maintaining business’s liquidity and credit worthiness, it is important that each business should check from time to time that it’s debtors and creditors are in balance with their counterparts.

What this means is that the total value your customers/suppliers owe you and owed by you (shown on the debtors or creditors report) is reconciled with each one of them. The Debtors and Creditors Reconciliation reports compare these values for you.

In an enormous business concern we have to contract with so many parties that we cannot keep track of all the transactions with them every time. So in order to see or confirm whether all the entries as per our accounts are tallies with the other party account and vice-versa.

Need to arrange an Account Statement of the concerned party and need to reconcile that statement as per our books for a certain period and send it to the concerned Debtor/Creditor for his verification.

On receiving that Statement the Debtor/Creditors will check it for its correctness and if there is any difference he will intimate the same. The difference might be due Goods in Transit, Cheque issued but not received through the party ,interest for delayed payment charged through the party but not acknowledge or for cash or quantity discount.

So the purpose is to find out any difference as early as possible so that there must not be any argument later on. Secondly it also acts a check against mishandling of the fund through the concerned employee.

First we have to reconcile with the debtors/Creditors, i.e payment made/received by them. Then we have check out the both opening balances of the entire debtor/creditor (Clienteles), & Check out the receipt/payment vouchers. A debtor’s reconciliation is to make sure that the balance brought forward and the closing balance tally. Reconcile payment and invoices

Reconciliation accounting business give you consist and precise data which can be easily used for the benefits of the decision-making desires.