Customer and supplier account matching: a practical method

Account matching, often called lettrage in French-language accounting software, connects entries that settle one another inside a customer or supplier account. An invoice may be matched with its payment, a credit note with the invoice it adjusts, or an advance with the final invoice to which it is allocated. A shared letter or code marks a balanced group, while unmatched lines remain visible as open items.

The process is easy when every invoice receives one clearly referenced payment for exactly the same amount. Real files are less tidy. One transfer may cover several invoices, a customer may pay only part of an amount, a supplier may receive an advance, or a payment may arrive without a useful reference. The purpose is not to clear as many lines as possible. It is to reconstruct and support the real relationship between documents and payments.

Before practising, take CMCG's free accounting level quiz to review third-party accounts, journals, debit and credit.

What account matching tells you

The total balance of a customer or supplier account is only a starting point. It does not identify the documents that make up that balance. An account might show an amount outstanding because of one invoice, several invoices, an unallocated advance or an entry posted to the wrong place.

Careful matching helps you:

• identify invoices that are genuinely still open;
• separate a late payment from a payment that was posted but not allocated;
• find advances that have not yet been applied;
• detect duplicates, posting errors and unusual balances;
• prepare a precise customer follow-up or supplier review;
• make the ledger easier for another person to examine.

Matching is therefore a control, not just a software feature. Giving entries the same matching code makes a claim: these lines belong to the same settlement. Documents must support that claim.

Prepare the evidence first

Define a clear scope: one third-party account, a specific period and an up-to-date ledger. Then collect the information that can prove each relationship.

Confirm that the period has been posted completely and that payments were assigned to the correct customer or supplier. Matching an incomplete account may make it look organised while important evidence is still missing.

Step 1: read the account before selecting lines

Separate invoices, credit notes, payments, advances and corrections. Examine dates, descriptions, references, amounts and the debit or credit direction. In a third-party account, the invoice and the movement that settles it appear on opposite sides. That opposition produces a balanced group only when the entries truly relate to one another.

Do not search only for identical amounts. Two unrelated invoices can have the same value. A reliable match uses several consistent clues: the customer or supplier, invoice reference, plausible date, payment method and bank evidence.

Step 2: match the straightforward cases

Begin with an invoice and payment that share the same amount and have a clear reference or supporting document. Select the lines, confirm that their total is zero, and apply one matching code.

Use a stable order, such as oldest to newest. This prevents a recent payment from being applied to an older invoice merely because the values happen to match. After each group, review the remaining balance and ask whether the matched lines tell a complete, understandable story.

Step 3: handle combined and partial payments

One bank transfer may settle several invoices. Add the invoices identified on the remittance advice and compare their total with the bank movement. If the amount agrees and the references confirm the allocation, the invoices and payment can form one matching group.

A partial payment does not close the invoice. Suppose an invoice for 4,000 is followed by a payment of 3,000. The account should still communicate that 1,000 remains. Depending on the software and procedure, you may use partial matching or leave the relevant lines open with a clear note. Never invent an entry simply to reach zero.

The outstanding amount is not a technical inconvenience. It is useful information for follow-up, unless another document such as a credit note explains the difference.

Step 4: connect credit notes and advances carefully

A credit note should be associated with the invoice or transaction it corrects. Check its reference and reason before using it to settle a difference. A credit note that happens to equal another invoice is not automatically related to it.

For an advance, follow the sequence: money received or paid, advance recorded, final invoice issued, and allocation completed. Until the final invoice exists or the allocation is confirmed, keep the advance identifiable. Matching it with an arbitrary invoice would hide a real prepayment and distort the open-item list.

Step 5: classify what remains open

After the clear matches, classify unmatched items by likely cause. A short action list is more useful than a ledger filled with vague “check later” notes.

• Invoice without payment: confirm whether it is genuinely outstanding.
• Payment without invoice: look for a missing entry, an advance or a wrong account.
• Amount difference: check for a credit, partial payment, documented deduction or posting error.
• Possible duplicate: compare numbers, dates and source documents before correcting anything.
• Wrong customer or supplier: obtain approval and follow the file's correction procedure.
• Old open item: investigate its origin instead of carrying it forward indefinitely.

Record the next action beside each exception: request a document, verify another account, ask a named person or prepare a correction for review. A clearly described exception can be managed. A forced match only hides it until a later review.

Automatic versus manual matching

Automatic matching can propose groups by amount, date or reference. It is useful when data is consistent and transaction volume is high. However, software may not understand the context behind a combined payment, an advance or two invoices with identical values.

Manual matching gives more control over complicated cases, but it requires discipline. In both approaches, your responsibility remains the same: examine the proposed relationships, reject weak ones and review the open items when the process ends. Automation speeds up a sound method; it cannot replace evidence or accounting judgement.

Common mistakes to avoid

• matching two lines only because the amounts are equal;
• combining entries from different customers or suppliers;
• forcing a group whose total is not zero;
• applying a credit note without checking which invoice it concerns;
• hiding a partial payment instead of showing the remaining amount;
• deleting or changing an entry before understanding its source;
• assuming an account is correct because its overall balance looks reasonable;
• leaving old items without an explanation or next action.

Final control checklist

Before finishing, confirm that every matched group has a documentary logic, balances to zero and uses consistent references. Then review only the unmatched lines. Do they represent invoices that are truly due, unallocated advances and specific exceptions still being investigated?

Compare the total account balance with the detailed list of open items. Pay particular attention to old dates, balances on an unusual side and payments with no invoice. Finally, leave a record of the period reviewed and the actions still outstanding so the next review starts from a clear position.

Build a professional skill, not a clicking habit

Practise with a progressive file. Start with three invoices and three direct payments, then add one combined payment, a credit note, an advance and a partial payment. Explain aloud why every proposed relationship is valid and name the document that supports it. If you cannot explain a match, it needs more checking.

CMCG's practical accounting training connects account matching with source documents, entries, third-party review and Sage. The goal is not only to produce a tidy ledger, but to justify what is settled and understand exactly what remains to be processed.