Accounts payable – reconciliation, partial payments and credit notes
An accounts payable ledger is a specification of a company's debts to suppliers. It shows which invoices are unpaid, when they fall due, and which payments or credit notes pertain to each invoice. You reconcile it by comparing open items with the accounts payable in the general ledger on the same date and investigating any discrepancies.
This guide helps those who run a small business or manage financial administration to go from a pile of invoices to a payment list that can be verified. The examples are simplified and refer to amounts including VAT.
The most important points in brief
- An invoice can be partially paid, credited, or disputed without being fully processed.
- Distinguish between remaining debt, due date, and payment approval.
- Use the same reconciliation date in the accounts payable ledger, general ledger, and payment documentation.
- An Excel overview is a follow-up aid and does not replace the company's regular bookkeeping.
What is the difference between an accounts payable ledger and an accounts receivable ledger?
| Documentation | Shows | Practical question |
|---|---|---|
| Accounts payable ledger | The company's debts to suppliers | Which invoices do we need to pay? |
| Accounts receivable ledger | The company's claims on customers | Which payments are we waiting for? |
| Cash flow budget | Expected payment flows | Will there be enough money when invoices are due? |
The list of supplier invoices provides the basis for the cash flow budget and cash flow forecast. Supplier credits affect outgoing payments; the company's credit policy for customers affects incoming payments. The two flows must be kept separate.
What information do you need to register?
Give each entry an identifier that makes it possible to trace back to the invoice. Do not use the supplier's name alone: the same supplier may have several invoices with identical amounts.
| Field | Why it is needed |
|---|---|
| Supplier, invoice number, and internal reference | Identifies the entry and links it to the source document. |
| Invoice date, due date, and currency | Distinguishes the invoice date from the payment terms. |
| Original amount, payments, and credit notes | Explains how the remaining amount was calculated. |
| Approval status and any payment block | Shows whether the invoice may be included in the next payment run. |
| Payment date, reference, and document link | Makes the payment traceable. |
| Open amount and responsible officer | Shows what remains and who is investigating the discrepancy. |
How to reconcile the accounts payable ledger step by step
- Determine the cut-off date. Generate the open items and the accounts payable balance in the general ledger as of the same day. Save the reports so that the next reconciliation can be compared.
- Check for completeness. Are there received invoices that have not yet been registered? Is the same invoice listed twice? The reconciliation will be misleading if the list and the bookkeeping include different items.
- Link payments and credits. Check the amount, currency, date, and invoice reference. A payment made after the cut-off date should not reduce the debt in an earlier reconciliation.
- Sum up open items. Compare with the general ledger. Check, among other things, manual entries, exchange rate differences, and payments that have been booked without being linked to the correct invoice.
- Document discrepancies. Write down the amount, possible cause, responsible party, and next action. Leave an explained difference until it is actually resolved; do not hide it by adjusting a total sum.
- Approve and follow up. Save the reconciliation with the date and the name of the person who checked it. Check at the next instance that previous discrepancies have been resolved.
The Swedish Accounting Standards Board (BFN) guidance states that bookkeeping must be reconciled continuously according to fixed routines. How often depends on the individual company's circumstances. A monthly reconciliation can be a practical internal routine but should not be described as a universal statutory monthly deadline. See BFN’s guidance on bookkeeping, section 2.15.
Example: partial payment and credit note
Invoice A is for 12,500 SEK. The company has paid 5,000 SEK and received a credit note for 2,500 SEK that pertains to the same invoice. The open amount becomes:
12,500 − 5,000 − 2,500 = 5,000 SEK remaining to be paid.
If the credit note has not yet been linked to the invoice, the payment list might incorrectly show 7,500 SEK. Therefore, check both the credit note itself and that it has been registered against the correct item.
If 5,000 SEK is instead disputed, the entry should not simply be marked as paid. Document the objection, separate the disputed from the undisputed amount, and handle the bookkeeping based on the circumstances. In case of uncertainty, an accounting consultant needs to assess the handling.
Create a due date list you can use
Sort open, payment-approved items by due date. It is helpful to show separate groups for already overdue invoices, the next seven days, and later payments. These intervals are a planning suggestion, not a regulatory requirement.
An invoice that is approved for payment still needs to be checked against bank details and payment documentation. If a bank account changes: verify the change via a previously known contact channel. Follow the company's invoice approval procedure and authorization policy and keep registration, approval, and payment separated where the organization permits.
Checklist before the next payment run
- All items have the correct due date and currency.
- Partial payments and credit notes are linked to the correct invoice.
- Duplicates, disputes, and payment blocks are investigated or clearly marked.
- The invoices are approved according to the authorization policy.
- The payment list fits within the cash flow plan.
- Payments are documented and reconciled after execution.
Common mistakes
- Mixing invoice amount with open amount. After a partial payment, the next payment should concern the remainder.
- Using different cut-off dates. A new payment can create an apparent discrepancy against an older general ledger.
- Registering a credit note as a new debt. Check the sign and the link to the original invoice.
- Excel becomes parallel bookkeeping without control. Determine which system is the primary source and how the overview is reconciled.
- Resolving a dispute only with a payment block. The block does not replace communication and documentation of the objection.
Frequently asked questions about accounts payable ledgers
Can I manage the accounts payable ledger in Excel?
Excel can be used for a supplementary invoice overview, payment schedule, and reconciliation check. A standard modifiable spreadsheet should not be used as the company's accounting software. BFN distinguishes between follow-up aids and bookkeeping, where registrations must be capable of being preserved and corrected in the prescribed manner.
Why doesn't the ledger match the general ledger?
Common troubleshooting points are different dates, manual entries, unlinked payments, duplicate invoices, and incorrectly handled credit notes. Document the cause per item before a correction is made.
Is a due date list the same thing as payment approval?
No. The due date shows when payment should be made according to the terms. Authorization and checks determine whether the item is ready for payment.
What do I do with a fully credited invoice?
Link the credit note to the original invoice and check that the remaining amount becomes zero. If the original invoice has already been paid, you need to follow up on a refund or agreed-upon offset separately.
Consolidate invoices, payments, and credit notes in one document
The template store's Accounts Payable Ledger & Payment Monitoring contains an Excel overview as well as Word and PDF documentation for follow-up. Use the package as a complement to the bookkeeping and adapt the routine to the company's payment process.
In-depth study and next steps
- Financial management in small businesses – choose the right documentation and routine
- Plan outgoing payments in a cash flow budget
- Authorization policy and invoice approval
- Credit policy for the company's accounts receivable
- Templates for finance and accounting
Sources
- Swedish Accounting Standards Board (BFN) – guidance on Bookkeeping, subsidiary bookkeeping, and reconciliation
- Swedish Accounting Standards Board (BFN) – questions and answers about accounting software
Last updated: . General financial and accounting information. The guide does not replace an assessment of the company's bookkeeping or individual advice.
