Suspense account reconciliation: What it is and how to do it
Even though you try to keep your books as accurately as possible, sometimes transactions pop up that just don't make sense right away. That's where suspense accounts come in. We'll walk you through what they are, how to use them, and most importantly, how to do suspense account reconciliation properly.
What is a suspense account?
Think of a suspense account as a temporary holding space for transactions you need to investigate. Maybe you received a payment but aren't sure which customer sent it, or you've got an expense that doesn't quite add up. Instead of making rushed decisions that could mess up your books, you can park these mysteries in a suspense account until you figure out where they belong.
Managing your suspense account effectively
The key to a well-managed suspense account is staying on top of it. Here's what we recommend:
Create a clear tracking system for each unidentified transaction — include dates, amounts, and any clues you have about where it might belong.
Set a regular schedule to review these transactions — weekly is ideal for most small businesses.
Document your investigation process for each item — this will help if you need to pick up where you left off later.
Keep the balance as low as possible — the longer transactions sit in suspense, the harder they become to resolve.
Why reconciliation matters
We've seen too many businesses let their suspense accounts grow until they become overwhelming. Regular reconciliation helps you:
Maintain accurate financial statements that reflect your true business position.
Catch potential fraud or errors before they become bigger problems.
Prepare yourself for a smoother tax season.
After reconciliation: Next steps
Once you've identified where transactions belong, it's time to:
Move them to their proper accounts using journal entries.
Update your documentation to reflect the corrections.
Review why items ended up in suspense to prevent similar issues in the future.
Common reconciliation challenges
Even experienced bookkeepers run into roadblocks when reconciling suspense accounts. Watch out for:
Missing documentation that makes it hard to trace transactions.
Multiple similar transactions that could match an unidentified payment.
Old transactions that no one remembers.
Time constraints that tempt you to make assumptions instead of doing proper research.
Need a hand?
Managing suspense accounts requires attention to detail and consistent effort. If you're finding it tricky, learn how we can help.