Current-account reconciliation: confirming balances with the other side

What is current-account reconciliation?

Every business relationship has two sets of books: yours and theirs. When you invoice a customer, a receivable appears in your books and a payable in theirs. When payment arrives, both close. In theory the two balances are always equal; in practice they drift apart because of payments in transit, late invoices, exchange differences and simple entry errors.

Current-account reconciliation is confirming in writing that the two balances agree as of a given date. You state the balance, and the other side either confirms it or disputes it by stating their own figure.

BA/BS is gone, so why does reconciliation still matter?

Businesses keeping balance-sheet-basis books used to report purchases and sales above a threshold on Form Ba and Form Bs. Because those filings were cross-checked, mismatches between two parties tended to surface, and many companies ran a monthly BA/BS reconciliation as routine.

Tax Procedure Law General Communiqué No. 565 ended this practice: Form Ba and Form Bs are not filed for September 2024 and later periods. The communiqué cites the spread of electronic documents and the aim of lowering compliance costs.

The change removed a burden, but it also removed a control. No monthly form points out the difference between two parties for you any more, while the causes of those differences are still there. That is why current-account reconciliation remains critical:

• Audits and loan applications: Auditors and banks want receivable and payable balances confirmed by the other side.
• Disputes: In a collection case, a balance the other side confirmed on a given date is strong evidence.
• Catching errors: A missing invoice, a payment recorded twice or a collection posted to the wrong account usually shows up in the first reconciliation.
• Collections: A reconciliation letter puts an overdue balance on the other side’s agenda politely but formally.

Commercial Code Article 94 and accepting a balance

Article 94 of the Turkish Commercial Code governs the periodic closing of the account in a current-account contract relationship. If there is no agreement or trade custom, the last day of each calendar year counts as the closing date. The party receiving the balance statement is deemed to accept the balance if they do not object within one month of receipt through a notary, registered letter, telegram or a document with a secure electronic signature.

This rule may not apply directly to every business relationship; check with your legal adviser whether yours qualifies as a current-account contract. The practical lesson: state the date, the balance and how to object clearly in the letter, and keep the replies on record.

How to run a reconciliation round

1. Choose a date. Reconciliation is usually done as of month, quarter or year end. The date fixes which moment the balance belongs to; movements after it are left out.

2. Set the scope. At year end, include every counterparty with a balance; during the year, work with those above an amount you choose or with heavy activity.

3. Clean your own records first. A letter sent before bank matching is finished produces disputes over payments in transit. Complete the bank and invoice steps in the month-end close guide.

4. Prepare the letter. It should contain both parties’ names and tax numbers, the reconciliation date, the balance and its direction (payable or receivable), the currency, a reply deadline and how to reply. For a ready skeleton, see the reconciliation letter template.

5. Send and track. Track sent, viewed, confirmed, disputed and unanswered letters in one list. Remind those who have not replied after one and two weeks. In the e-reconciliation module, reminders go out automatically on days 7 and 15 by default and the approval link is valid for 30 days.

Settling disputes

A dispute is not a bad sign; finding differences is the point of reconciliation. When one arrives, ask the other side for their balance and their account statement up to the date, then compare the two statements line by line. Most differences come from:

• Payment in transit: They paid before the reconciliation date, but it reached your bank afterwards.
• Missing invoice: An invoice is recorded on one side only, often a late or rejected e-invoice.
• Returns and discounts: A return invoice was booked on one side but not the other.
• Exchange differences: On foreign-currency accounts, the two sides used different dates or rates.
• Advances and offsets: A prepayment was booked as an advance on one side and against an invoice on the other.
• Duplicates or the wrong account: The same payment was entered twice or posted to a similarly named counterparty.

Once you find the difference, agree who corrects it, make the correction and resend the reconciliation with the updated balance. Note the cause and the fix on the reconciliation record; the next round with the same counterparty will be easier.

Counterparties that do not reply

Some counterparties will not reply in every round. Accept that, but do not leave it:

• Keep unanswered counterparties on a separate list and check each contact person; the letter often went to the wrong person or an address no longer in use.
• If there is still no reply after the reminder, call. A short conversation often gets results faster than email.
• Do not read silence from an important counterparty as confirmation. Whether a balance counts as legally accepted depends on the conditions above and on the nature of your relationship.
• If the same counterparty stays silent round after round, run the next reconciliation through the salesperson or buyer who owns the relationship.

Frequency and calendar

Companies that reconcile once a year usually find the differences at the worst moment, the year-end close. A healthier rhythm: quarterly with large balances, year end for everyone else. Putting the quarter-end reconciliation in the calendar as the last step of the month-end close keeps it from being forgotten.

Keeping the records

Reconciliation letters and replies are business correspondence. Article 82 of the Commercial Code requires merchants to keep incoming business letters and copies of outgoing ones for ten years; Article 253 of the Tax Procedure Law sets a five-year retention period for books and documents. Keep the confirmed letter, dispute correspondence and corrections together, in a way that shows who sent and confirmed what, and when.

In Müşavir, each reconciliation’s sent, viewed, confirmed and disputed history is recorded; the list exports to Excel and the PDF letters stay attached to the reconciliation record.