DBD: Reconciling Your Accounts Payable (AP) at Month End

An essential part of completing your month-end processing is ensuring that your Accounts Payable sub-ledger balances perfectly with your General Ledger. Follow this guide to verify your balances and troubleshoot discrepancies if your accounts do not align.

Step 1: Pre-Requisites Before Balancing

Before running your reconciliation reports, ensure all current period transactions are fully processed:

• Update all Purchase Journals and Disbursement Batches that are currently in progress.
• Update your General Ledger Detail Transactions to ensure all posted batches are reflected.

Step 2: The Reconciliation Process

To verify that your accounts are in balance, run and compare the following two reports for the same period:

1. Print the Accounts Payable Trial Balance.
2. Print the General Ledger report for your AP Account.
3. Compare the Ending Balance Total from the AP Trial Balance with the Ending Balance on your General Ledger report.

Step 3: Troubleshooting Discrepancies

If your reports do not balance, use the following checks to isolate and identify the cause of the variance.

Check 1: Prior Month Carry-Over

First, determine if the issue originated in the current month or a previous one:

• Compare the Opening Balance of your current AP Trial Balance with the Beginning Balance on your General Ledger.
• If they balance: The issue is isolated to transactions in the current month.
• If they do not balance: The problem is a carry-over from a prior month.

How to fix a prior month variance:

• Look for a journal entry that may have been made incorrectly in a previous period.
• Compare your Current General Ledger report for the current period against the physical/digital copy you printed and filed last month. Verify if they still match.
• Compare the Beginning Balance on the current period AP Trial Balance with the Beginning Balance from the prior month. If they do not equal, compare both reports side-by-side to identify the specific Vendor and Invoice Number causing the discrepancy.

Check 2: Current Month Journal Entries

If the prior month balances match, the issue occurred during the current period:

• Review your General Ledger for the current period.
• Look specifically for any JE (Journal Entries) manually posted directly to the AP account during this timeframe. Manual JEs are a frequent cause of sub-ledger imbalances.

Check 3: Analyze Source Journals

If no manual journal entries are found, audit your source journals:

• Use your General Ledger selection screen to filter totals by the "Source Journal" field.
• Verify the totals for each distinct type of source journal to pinpoint where the processing variance occurred.