The Importance of Reconciliation
For example, Accounts receivable reconciliation aims to match and clean up the credits and debits on your company’s books, so they are clean and auditable, but just as necessary, detail and explain the difference between what your customer believes is owed and your ledger.
On a grittier level, it is the detailed reconciliation of a single transaction, for example, the discrepancy between a credit memo you issue for a customer return vs that (often a more significant amount) the customer takes as a deduction.
Accounts Receivable Reconciliation is an important process because it confirms that the general ledger and subsidiary ledger are accurate and enables you to collect the due amounts. Reconciliation also updates account records to apply properly and credit all payments.
Like many accounting processes, AR reconciliation is something people can attempt manually or through an automated system for higher volumes. Either way, there is a set process for reconciliation.