A balance confirmation is a letter in which a business sends a customer or supplier the balance of their account in its books on a set date and asks them to confirm it or state the balance in their own books. This balance confirmation letter template has a customer version and a supplier version, each adding up the balance from the open invoices and writing it in figures and words, plus a sheet to reconcile differences and a memo both parties sign.
In the example the customer owes SAR 25,000.00 in our books across three invoices, and the customer confirms SAR 22,000.00. The SAR 3,000.00 difference is a transfer they made that has no receipt voucher in our books yet, so the unexplained difference drops to zero.
How to use the balance confirmation template
- Pick Customer confirmation or Supplier confirmation and enter your business name, the other party and the balance date.
- Edit the open-invoice table inside the letter; the balance in the text updates in figures and words.
- Download the letter in Word to add your letterhead, or as a PDF to send, and attach the statement of account.
- When a reply shows a difference, open Reconcile differences and list the items until the unexplained difference reaches zero, then print the Reconciliation memo.
What is a balance confirmation and why it matters
A balance confirmation is written agreement from the other party that the current account between you shows the same balance in both sets of books. It catches the invoice that never arrived, the payment that was not recorded and the forgotten return before the year is closed, so a difference does not turn into a dispute months later, and the external auditor finds customer and supplier balances supported.
How to write a balance confirmation letter
| Part | What goes in it |
|---|---|
| Letterhead and date | Your business name, the letter number and the date it is issued. |
| Balance date | The last day of the period, such as 30 September, not the sending date. |
| Balance and side | The amount in figures and words, owed to us (customer) or owed to you (supplier). |
| Open invoices | Each invoice number, date and amount outstanding; their total is the balance. |
| Reply request and deadline | "Correct" and "Not correct" boxes with space for the difference, signature and stamp. |
The example letter reads: "Please confirm the balance of your account with us as at 30 September 2026. According to our books it is SAR 25,000.00 owed to us", followed by three invoices of 9,800.00, 8,450.00 and 6,750.00.
Customer confirmation versus supplier confirmation
With a customer you send the letter and ask them to confirm an amount owed to you; typical differences are transfers you have not recorded, or agreed returns and discounts. With a supplier you confirm an amount you owe (SAR 28,555.00 in the example); typical differences are invoices for goods you have not received, goods in transit, or a return the supplier has not recorded.
Settling differences after the confirmation
When the reply says "not correct", do not post the whole difference as one entry. List your balance and theirs, then each item that sits in one set of books only with its document, and correct your own books for the items that belong to you: a receipt voucher for the unrecorded SAR 3,000.00 transfer in the customer example, or a note for a return. In the supplier example their statement is SAR 4,000.00 higher than our books, explained by a SAR 5,860.00 invoice for goods not yet received and a SAR 1,860.00 return they have not recorded.
Common mistakes
- Sending the balance without the invoices behind it, so the other party cannot find the source of a difference.
- Comparing two balances on different dates, which creates a difference that does not exist.
- Clearing the difference with one entry before knowing its cause.
Accounting notes
A confirmation letter sent by the business serves internal follow-up and does not replace the confirmation the external auditor sends directly at year end. A signed reply supports the balance in a dispute; its weight is a matter for the competent authority under Saudi commercial regulations.
When customer and supplier balances differ every quarter
Microtec accounting software is an ERP system for businesses in Saudi Arabia that brings sales, purchasing, inventory, finance and HR into one place.
Frequently asked questions
When should I send a balance confirmation letter?
At financial year end before closing and the audit, at each quarter end for major customers and suppliers, whenever a balance is disputed, and before ending a trading relationship.
Is a balance confirmation legally binding?
The letter itself is a request and binds no one. A signed and stamped reply is the other party's acknowledgement of their balance on that date and can be relied on in a dispute; its effect is for the competent authority to judge.
What if the other party does not reply?
Send a reminder once the deadline passes, together with the statement of account. Some businesses state that no reply within the deadline counts as acceptance; that is trade custom, not a legal rule.
Should I attach a statement of account?
Yes. The statement lets the other party trace every invoice and payment. The letter gives the balance and open invoices, and the statement gives all movements for the period.