We can define cross-referencing as matching the appropriate receivables and payables invoices for each customer or vendor.
In accounting, cross-referencing consists of “cleaning up” accounts. The user will therefore mark several accounting entries with the same letter. These entries are therefore connected to each other.
The main interest of cross-referencing is the connection between an invoice and one or more payments. The accountant can therefore quickly identify:
- The status of the invoice (unpaid, fully or partially paid)
- The open balance for the client/supplier
- Which payment(s) settle which invoice(s).
Thanks to efficient use of cross-referencing, accountants can:
- Detect unpaid invoices
- Detect errors (wrong amounts, direction of the entry, incorrect general account, etc.)
- Detect duplicate payments/duplicate entries
The use of cross-referencing is also recommended for improving the visibility of open accounting items. If one of my suppliers regularly sends me invoices, I can easily distinguish the invoices that have already been paid from others. I should therefore only view non-cross-referenced and/or partially cross-referenced invoices. Cross-referencing must therefore be done on a regular basis and as soon as the posting of a payment is done (and therefore when the bank statement is entered).
This visibility is necessary both for accountants, but also for managing recovery. I can analyse the average time for my clients to pay more easily.
Cross-referencing methods may vary. Obviously the accountant will always be the best person to carry out this operation, but it is possible to facilitate cross-referencing using high-performance tools such as:
- clear and accurate reference information at the time of payment
- the use of structured communication on invoices issued and importing bank statements in electronic format
- automatic cross-referencing (e.g. same company and same amount, etc.)
- etc.
Adfinity has a whole series of tools for cross-referencing which guarantee visibility of open accounts and balances...
