Worked example
One unmatched bank credit: why the right answer was to hold it.
Illustrative worked example. Not a customer case study. The consultancy, the payer and the figures are invented; the situation is one that turns up in almost every set of books.
A credit arrived that matched nothing. Three explanations fitted it, and one of them fitted almost perfectly — the amount was within a few units of an open customer invoice. All three were wrong. The money was a refund of something the business itself had paid twice, ten months earlier, sent by a company whose name appeared nowhere in its records. Holding the line for eleven days is what allowed a fourth answer to exist at all.
A credit that matched nothing — and nearly matched something.
Bramley Court Consulting is an invented seven-person consultancy. On 6 October a credit of 3,412.50 landed in its current account with the narrative “FT CLARIDON FIN SVCS 41077”. There is no customer called Claridon. There is no supplier called Claridon. The reference matches no invoice, no contract and no project code. Figures are shown without a currency; the mechanics do not depend on it.
What made it dangerous was not that it matched nothing. It was that it almost matched something. An invoice to Whitcombe Partners for 3,480.00 had been outstanding for six weeks — a difference of 67.50, which is precisely the size of number that gets explained away as “probably bank charges” by somebody with a list to clear.
Three explanations were genuinely plausible, and each was consistent with everything visible at the time:
| The explanation | Why it fitted | What it would have meant |
|---|---|---|
| A customer paying through a third party | Large customers pay through group treasury companies and payment providers all the time. The amount was close to a real open invoice. | Whitcombe’s invoice settled, and 67.50 written off as a charge nobody could name. |
| A supplier refund or rebate | Refunds arrive from billing agents with unrecognisable names, often long after the original charge. | A reduction in cost — but against which account, and in which period, was entirely unknown. |
| Money that was never the business’s income | Owner transfers, loan drawdowns and funds received on a client’s behalf all arrive as ordinary credits. | An obligation to pay it back out again, recorded as though it belonged to the business. |
A useful instinct: the closer an unexplained amount sits to a number you already recognise, the more carefully it deserves to be treated. Exact matches are usually true. Near-matches are where the expensive errors live.
Three guesses, three different kinds of wrong.
Each of the three would have produced a clean, coded, reconciled entry. None of them would have looked like a question afterwards, and that is the entire problem — a wrong entry and a right one are typographically identical.
They fail in different directions, which is worth spelling out, because “it would have been wrong” is too vague to be persuasive:
- Applied to the Whitcombe invoice, the business loses twice. A debt that was never paid is marked settled, so nobody chases it and it quietly ages out. And the money that was genuinely due back is consumed clearing that phantom settlement, so it is never recovered either. One credit, two losses, neither visible on any report.
- Posted as a supplier refund to a general expense account, this month’s costs fall by 3,412.50 for no reason connected to this month. Margin improves on paper, the comparison against every prior month breaks, and the underlying duplicate payment — still unidentified — can happen again.
- Posted as other income, profit rises by money the business may have to return. If the receipt turned out to be held on a client’s behalf, an obligation has been recorded as earnings, and anything downstream that rests on the revenue figure inherits the error.
The most damaging property of the first guess is subtler than the arithmetic. It would have removed the only signal capable of catching it. Marking Whitcombe’s invoice as paid stops the follow-up — and the follow-up is precisely the conversation in which the customer would have said they had not paid anything.
What was done instead, and how it ended.
The bank reconciliation was completed on time. That surprises people, so it is worth being explicit: an unidentified credit does not stop a bank account agreeing. The cash was real and the balance tied to the statement to the unit. What stayed open was the meaning of one line, not the accuracy of the cash position.
While it was open, the books carried it honestly:
- The receipt was recorded as cash in, explicitly unidentified — not allocated to a customer, not in revenue, not in a general expense account.
- It appeared as one line the owner could read: what arrived, on what date, under what narrative, what had already been checked, and what would settle it.
- Whitcombe’s invoice stayed open at 3,480.00, because nothing had been received against it.
- The month’s reported revenue was unaffected. No sale had happened.
Two pieces of retrieval ran in parallel, both on the bookkeeping side rather than the client’s. The bank was asked for the full payment data behind a narrative the statement had truncated. And the payer name was searched across the supplier ledger and prior-period payments, not only the customer ledger — the search that the tempting explanation would have made nobody think to run.
On day four, the routine receivables follow-up to Whitcombe produced the sentence that killed the first explanation outright: the invoice was in their approval queue and nothing had been paid. That fact existed only because the books had not already assumed otherwise.
On day eleven the bank returned the full remittance: “Claridon Financial Services, on behalf of [software vendor], credit note 4471.” The supplier ledger showed the answer immediately — the same annual renewal charged twice in December, ten months earlier, queried at the time by somebody who then moved on. Claridon administers that vendor’s billing. The credit was the refund.
It was recorded against the account the original charge had gone to, in the current period, with a note tying it to the December entry it reversed — visible as a recovery of a prior-period cost rather than dissolved into this month’s numbers. Two things were left behind afterwards: a note on the supplier record that Claridon bills on that vendor’s behalf, so the name is recognised instantly next time, and a check for the duplicate charge that started it.
Where At Par fits — and the limits.
Holding is a working state, not a stalled one. At Par records the cash, marks the classification unresolved in language the owner can read, keeps the item visible while it is open, does the retrieval itself, and asks the business only for the fact nobody else can supply. When it resolves, the evidence and the reasoning stay attached to the entry. A qualified accountant (ACCA) is accountable for the work.
This is part of bookkeeping and month-end close, whether the records sit in QuickBooks or Xero. The general operating standard behind this example — hold, clarify, gather evidence, resolve, preserve — is set out in what should happen when a bank transaction cannot be matched. The follow-up that disproved the tempting explanation belongs to receivables and invoice follow-up. Where several months of unmatched items have accumulated, that is catch-up work first.
The honest limit: not every unidentified receipt resolves. Some are never explained, and at that point the decision is taken with the business, recorded with the reasoning, and left reversible if the truth turns up later — which is a different thing from a guess made on day one and never revisited. The other half of this discipline, on the document side rather than the bank side, is walked through in one messy supplier invoice.
Asked by owners looking at a line nobody can explain.
Why is a payment that almost matches an invoice more dangerous than one that matches nothing? +
Because it invites an explanation instead of an investigation. A credit that resembles an open invoice, short by a small amount, is easily reconciled by assuming a bank charge or a rounding difference — and once applied, the invoice shows as settled and nobody looks again. A payment matching nothing at all is obviously unresolved and stays on a list. The near-match is the one that closes a real debt on the strength of an assumption, which is why small differences deserve more scrutiny than large ones.
Can a bank reconciliation be completed while a transaction is still unexplained? +
Yes, and the two things are often confused. Reconciliation agrees the cash recorded in the books with the cash the bank says exists. A receipt whose purpose is unknown is still real cash and still forms part of that agreement. What remains open is the classification — which customer, which account, which period. A set of books can therefore be fully reconciled and still carry named unresolved items, and that combination is healthier than a ledger with no open items and several quiet guesses.
What do the accounts show while a receipt is still unidentified? +
Cash includes it, because the money genuinely arrived. Revenue does not, because no sale has been established. No customer account is credited, so anything genuinely outstanding stays outstanding and continues to be followed up. The item itself appears as a named open position with a date, a description and an owner. The effect is a slightly less tidy ledger that is accurate, rather than a tidy one containing a decision nobody made deliberately.
How do you identify who sent a payment when the bank reference means nothing? +
By exhausting the records before asking anyone. Bank statement narratives are frequently truncated, and the full payment data held by the bank often carries the payer’s own reference or a credit-note number. The payer name should be searched across supplier records and prior-period payments as well as customer records, since refunds, rebates and duplicate-payment reversals arrive from billing agents whose names appear nowhere else. Only what remains after that is worth putting to the business as a question.
Can money received from a supplier be treated as income? +
Generally not. A refund, rebate or credit from a supplier is usually a recovery of a cost, and it belongs against the cost it came from rather than in revenue. Recording it as income overstates both sales and profit, and disconnects the credit from the charge that caused it, which is what allows a duplicate payment to happen again unnoticed. Where the original charge sits in a period already reported, the recovery is normally recorded in the current period with a note explaining what it relates to.
Where does a refund of a duplicate payment belong in the accounts? +
Against the same account the original payment was charged to, so the net cost of that supplier or service reflects what the business actually spent. The entry should carry a reference to the original charge, which serves two purposes: it explains an otherwise unexplained credit to anyone reviewing the account later, and it records that a duplicate occurred at all. A duplicate payment refunded but never documented is a control weakness that leaves no trace of itself.
What happens if an unidentified payment is never explained? +
It cannot sit open indefinitely, so at some point a decision is taken rather than avoided. The right process is to present what was checked, what was ruled out and what remains possible, agree a treatment with the business, and record the reasoning alongside the entry so it can be reversed if the explanation later appears. That is materially different from a guess made on day one: the decision is deliberate, documented, owned by the business, and recoverable.
Send us the month that will not tie. We’ll tell you what is genuinely unexplained.
One bank statement and whatever paperwork exists around it. We will come back with what matched cleanly, what only appeared to match, and the specific question each remaining item needs answered.
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Reviewed by an ACCA on the At Par team · Last updated 29 July 2026 · Illustrative worked example. Not a customer case study. The consultancy, the payer and the figures are invented. See what we actually do.