The Creditors Control nominal account represents all the money that you owe your suppliers. Reconciling the balance of this account is something most businesses do regularly.
This nominal account is updated automatically every time you post the following transactions to your supplier's account: Invoice, Credit Note, Payment or Refund.
To reconcile your Creditors Control account, you check that the balance of the account matches the total outstanding value on your supplier accounts, as shown on the Aged Creditors Report.
You can do this for all your transactions or up to a date in the past, such as the end of your previous month.
Tip: Remember the dates you use when running the various reports are the key to reconciling successfully. All reports must be run using the same date range to make sure the same transactions are included.
Reconcile the total balances
Find the balance of the Creditors Control account
Add the balance of any deferred transactions
Find the total outstanding balance of your supplier accounts
What if there's a difference?
Differences can be caused by a number of issues, most commonly these are:
- Journals posted directly to the Creditors Control Account.
- Opening balances entered for your supplier accounts.
- Purchase transactions posted to the suspense account.
In the example shown:
Your Creditors Control nominal account balance is £868.06, and your Aged Creditors report total is 738.06, making a difference of £130.
Check for any journals posted directly to the Creditors Control Nominal account
Check for any opening balances entered for your customer accounts
Check for any transactions posted to the suspense account
Check your nominal account balance is correct
Reconcile retrospectively
Sometimes you'll want to check what the balances are for data in the past such as the end of the previous month. This is also very straight forward. Again the key thing is to make sure that you use the same date.
Find the balance of the Creditors Control account
Find the total outstanding balance of your supplier accounts
What if there's a difference?
Differences between the balance of these reports can be caused by a number of issues.
- Check that you're running the reports for the same dates.
- Follow the steps above to check for:
- Deferred transactions.
- Opening balances.
- Journals posted to the Creditors Control Account.
- Purchase transactions posted to the suspense account.
- The nominal account balance is correct.
To check why there's a difference when comparing the balances for a specific period, consider the following:
Check your allocation dates
Check for foreign currency adjustments
FAQs
To reconcile your Creditors Control account, you check that the balance of the account matches the total outstanding value on your supplier accounts, as shown on the Aged Creditors Report.
How do you do a creditors reconciliation? ›
Step 1: Gather Relevant Documents Collect creditors' statements, purchase invoices, payment records, and credit notes for the reconciliation period. Step 2: Match Invoices and Statements Compare the information on suppliers' statements with the corresponding purchase invoices.
What is control account reconciliation? ›
Comparing the sales ledger control account balance with the total of the sales ledger accounts is a form of internal control. This comparison is called a control account reconciliation.
What is the purpose of reconciling the balance on the creditors control account with the total of the creditors list from the creditors ledger state two points? ›
Companies use reconciliation to prevent balance sheet errors on their financial accounts, check for fraud, and make sure that transactions were appropriately booked to the general ledger. In double-entry accounting, each transaction is posted as both a debit and a credit.
What is a creditors control account? ›
A creditors control account refers to a ledger account that indicates the sum of the creditors' transactions within the master ledger. A creditors control account is also called a payable control account or purchases ledger control account because the account is created to indicate the sum of the business creditors.
What goes in the creditors reconciliation? ›
Creditors' reconciliation is the process by which Creditor/s account (creditor's transactions in the system) is compared and reconciled against a monthly statement received from the creditor. Once the two records are reconciled, the account becomes payable.
What is an example of a reconciliation control? ›
A few common examples include: 1) Bank reconciliation: Reconciling the cash balance per bank statement to cash balance per accounting records ensures that the cash inflows and outflows of the business have been properly recorded.
Are creditors control debit or credit? ›
2100 Creditors Control is the other way around, i.e. should usually be a credit balance meaning you owe suppliers. A debit balance would mean they we you, and it would appear in the assets section.
What is the purpose of reconciling the balance of the creditors control with the creditors list? ›
The Creditors' Control account final balance in the General Ledger is compared to the Creditors List total at the end of a month. It will ensure that posting to the control account and the individual creditor's account in the CL was accurately completed. Differences could be investigated and corrected.
Why is it important to reconcile the creditors and debtors within an accounting system? ›
This process helps to ensure accuracy in accounts receivable and provides better cash flow management. Reconciliation also allows businesses to identify potential discrepancies in their statements and address them quickly, saving time and money in the long run.
Account reconciliation is important because it aids in the discovery of errors, fraud, or inconsistencies in the accounting books. It benefits the business's financial stability. Supporting a company's success is a smart business move.
What is another name for a creditor control account? ›
Please take note that “sales ledger control account' is also known as “debtors control account' and “purchases ledger control account” is the same as “creditors control account.” Both names should be familiarized because all the names are often used during examination.
What increases the creditors' control account? ›
The creditors' control account increases on the credit side with purchases on account and decreases on the debit side with purchase returns and payments to suppliers.
Is creditors control a liability or expense? ›
Creditors are a liability because they can be considered as having a negative effect on the company's net worth. They would be considered an asset if they brought in more money than it cost them to produce and distribute their products.
What is reconciliation of debtors and creditors? ›
Debtor reconciliation verifies and updates customer accounts by comparing customer payments against invoices and other documents. It helps companies keep track of customer payments and ensure that the correct amounts are being paid to creditors. (
