AP to GL Reconciliation: How to do Accounts Payable to General Ledger Reconciliation?

Accounts payable processing is a significant part of business operations as it impacts budgeting, working capital finance, sourcing and strategic decision-making. Maintaining an AP sub-ledger independently cannot not be sufficient to ensure data accuracy or avoiding incorrect entries. AP to GL reconciliation is important as it helps to view all the accounting entries in their totality. 

This article discusses how to reconcile AP subledger to GL, formats of AP to GL reconciliation with examples.

What is ‘Accounts Payable’?

In bookkeeping, Accounts Payable (AP) is a subsidiary ledger that records amounts that a company owes to its suppliers and vendors for purchasing goods and services on credit. The usual credit period can range from 30 to 90 days. So, financial obligations recorded in an AP account are short-term in nature or current liabilities. 

Some of these short-term obligations are payment dues to:

• Suppliers of raw materials 
• Services contractors
• Services on subscription 
• Utilities providers 
• Professional services providers 

As a sub-ledger, AP records the following details for each purchase transaction,  

• Date of receiving an invoice 
• Individual invoice number 
• Description of goods or services received 
• Amounts due 
• Due date of payment 
• Payments made 
• Outstanding balance 
• Debit/Credit 
• Returns 
• Discounts 
• Adjustments 

As per the principle of double-entry bookkeeping, a credit purchase (an increase in liability) is recorded as a credit entry and a payment to suppliers (a decrease in liability) is recorded as a debit entry in the AP. So, for any period, a net positive payable will always be a credit entry in the general ledger. 

What is a General Ledger?

A general ledger is the final record of every financial transaction conducted during a period in a business. As the core financial document or book in the accounting system, GL acts as the principal source of accounting data for the preparation of,   

• Balance sheet
• Profit and Loss 
• Statement of cash flows 

It contains data from every single account maintained in a business to record financial data. Such accounts can be broadly segregated into: 

• Liability 
• Asset 
• Equity 
• Revenue 
• Expense 

In double-entry bookkeeping, any financial transaction is posted in the company’s books under, at least, two different accounts. One of these two accounts gets debit entry and the other gets credit entry of equal amount. At the end of an accounting period, each account must be either in net debit or in net credit. When these final figures (debit or credit) from each of these accounts are posted in the general ledger, the sum of all debit entries must match the total credit entries. This is the way to ensure arithmetic and data entry accuracy in the financial system in any business. 

What is AP to GL Reconciliation?

Any reconciliation in accounting is the practice of comparing and verifying two different sets of financial records. An ‘Accounts Payable’ to ‘General Ledger’ reconciliation compares the total balance in the AP sub-ledger with the posting made under the AP control account in the GL. 

Why is AP to GL Reconciliation Important?

Accurate AP to GL reconciliation is essential in accounting practice for several reasons. 

• Accuracy and integrity of financial data

Reconciling AP data with GL ensures short-term liabilities, like invoice dues, are accurately posted in books and reported in the period-end financial statements. Parity between AP account and AP control account in GL ensures reliability of accounting practices. 

• Error detection 

In large companies, a dedicated team handles the Accounts Payable process. They capture invoices, codify them, make appropriate entries in the book, get approval from authorised approvers and process payments. The same team may not have real-time access to other related accounts. Reconciling AP balance with GL can help identify incorrect entries to other accounts, missed payments and fraudulent data errors.  

• Facilitating payments to suppliers/vendors

Regularly reconciling AP to GL helps authorised payment approvers in a company to make decisions confidently without hesitation about data errors. As a result, the AP team can timely process payments to suppliers and vendors. This strengthens vendor relations. 

• Cash flow management 

Regular comparison of short-term liabilities with availability of working capital helps management make accurate cash flow forecasting. 

• Maintaining seamless audit trails 

Finally, AP to GL reconciliation helps establish a seamless accounting connection across the books. This helps an auditing team to cross-check and verify accounts efficiently. 

How to do AP to GL Reconciliation?

AP to GL reconciliation is an essential accounting practice in both manual and automated bookkeeping systems. In manual bookkeeping, it would involve gathering physical evidence of all the credit purchase records, supply receipts, payment vouchers, and tallying them with GL entries.  

A digitised accounting system makes reconciliation much easier and error-proof as accountants can automate a significant part of data extraction, matching and adjustments activities. 

AP to GL Reconciliation Process

Reconciling AP accounts with the AP control account in a GL involves: 

1. Preparation of AP trial balance - The trial balance helps to calculate the final outstanding payable at the end of an accounting period. 
2. Preparation of AP ageing report - Ageing report on accounts payables helps provide a detailed understanding of the invoice dues as it segregates them into categories, like current dues, 1-30 days, 31-60 days and 60-90 days. 
3. Getting the AP control account balance from GL - This is the total payable or dues that a company owes to suppliers and vendors on the date of period-end accounting closure. 
4. Comparing the AP balance with GL control account - In absence of any data entry errors or accounting inaccuracies, the amount as per the AP trial balance must match with the dues as per the GL control account.  
5. Identify differences and investigate - If there exists a difference between AP trial balance and GL control account, we must investigate the root cause of discrepancy. Some of the common causes of discrepancies can be, missing entries, incorrect postings or incorrect adjustments. 
6. Making suitable adjustments in accounts - Once the root cause is identified, appropriate adjustments in sub-ledgers have to be made. For example, a supply invoice has been entered in the AP account, approved for payment and processed. However, due to some reasons the bank delayed the payment. So, the cash balance has not been credited. This may result in discrepancy between AP trial balance and GL control account. 
7. Final comparison of AP balance with GL control account - This is essential to compare and verify the agreement between AP trial balance and GL control accounts once the adjustments are complete. 

AP to GL Reconciliation Format

Modern automated accounting software applications use different user interfaces for easier comparison and reconciliation of AP accounts with GL. However, a conventional spreadsheet format for AP to GL comparison looks such as-

AP to GL Reconciliation Example

Let us assume we are reconciling AP to GL for a company for the fourth quarter ending 31st March 2025. 

1. AP sub-ledger trial balance was ₹97,500. 
2. GL accounts payable control account showed a total dues of ₹98,000. 
3. The discrepancy is ₹500. It means the AP trial balance shows a lower payment obligation of ₹500. 
4. After a thorough investigation, it was found that an invoice of ₹500 has been entered as an accrual-based expense in the GL. However, the invoice has not yet been posted in the Accounts Payable sub-ledger. 
5. As part of the adjustment, the invoice data is posted in the AP account, and a fresh AP trial balance is prepared. 
6. Both the AP trial balance and the GL control account agree to a total payment obligation of ₹98,000. Thus, the AP to GL reconciliation is complete. 

AP to GL Reconciliation best Practices

For accurate maintenance of AP sub-ledger and financial integrity, it is essential to follow only the best accounting practices during AP to GL reconciliation. 

• Reconcile regularly as per the official accounting schedule.  
• Follow standard documentation processes for maintaining financial records.  
• Use a standard reconciliation format if you are not leveraging accounting automation.  
• Start the investigation immediately after finding a discrepancy.  
• The team reconciling and investigating discrepancies should be different from the team maintaining AP. 
• Establish accountability for teams. 
• Leverage technologies and use process automation tools, wherever possible. 
• Regular training should be conducted for teams handling AP and reconciliation processes.