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A customer insists an invoice is paid, but the receivables ledger still shows it open.
Find the receipt in the bank statement by UTR, amount and date range, then test whether it is net of TDS, combined across invoices, posted to another party or applied to another invoice.
Bank statement with narrations, the customer's open invoice list, the customer's UTR or payment advice, and an on-account receipt head for unmatched money.
The receipt is applied to the right invoices, any TDS is booked as a receivable, and the customer's statement agrees with theirs.
When a customer says they paid but your ledger still shows the invoice unpaid, the money is usually already in your bank statement. It has not been matched to the invoice. The most common reasons are a missing UTR or invoice number, TDS deducted from the payment, or one payment that covers several invoices.
This article starts from the open invoice. If you have searched the bank statement and the money is not there at all, that is a different problem: ask the customer for the UTR and ask your bank to trace it.
What are the likely causes?
| Cause | What you see | How to confirm it in the bank statement |
|---|---|---|
| Receipt not matched | Credit sits in the bank, invoice still open | Search the narration for the customer’s name or the amount |
| Paid against another invoice | A different invoice of the same customer shows paid or overpaid | Check which invoice the receipt was applied to |
| Paid net of TDS | Credit is smaller than the invoice, so nobody linked them | Shortfall equals 1, 2 or 10 percent of the value before GST |
| Credited late or to another account | No credit in the expected week | Check the next few days and your other current accounts |
| Wrong party name | Credit posted to a similarly named customer | Look for an unexpected payment on the other customer’s account |
How do I find a customer’s payment in the bank statement?
Use three filters, in this order:
- UTR. Ask the customer for it. NEFT and RTGS references appear in the narration of the credit. Search for it with Ctrl+F in the bank’s Excel download.
- Amount. Search for the invoice amount, then for the amount less likely TDS, then for the total of two or three open invoices.
- Date range. Look from the date the customer says they paid to about three working days later. Transfers made late on a Friday or before a holiday can show on the next working day.
Narrations are often cut short. “NEFT-HDFCR52026100312345-SHARMA TRADERS” may be all you get. The UTR and the first part of the name are usually enough.
Worked example: one ₹2,36,000 credit, three open invoices
Your customer has three open invoices:
| Invoice | Date | Amount |
|---|---|---|
| INV-501 | 2 Sep | ₹1,18,000 |
| INV-514 | 9 Sep | ₹1,18,000 |
| INV-530 | 23 Sep | ₹1,18,000 |
On 8 October the customer says, “We paid last week.” The bank statement shows one NEFT credit of ₹2,36,000 on 4 October.
₹2,36,000 is exactly two invoices of ₹1,18,000. It cannot be one invoice and cannot be all three (that would be ₹3,54,000). So which two?
The narration carries the UTR the customer sent. Their payment advice, which you ask for, lists INV-501 and INV-514, the two oldest. Apply the receipt to those two. INV-530 remains open and is not yet due under 30-day terms.
Now suppose the credit had been ₹2,32,000. The gap from ₹2,36,000 is ₹4,000. Each invoice is ₹1,00,000 plus 18 percent GST. TDS at 2 percent on ₹1,00,000 is ₹2,000, so two invoices give ₹4,000. Apply ₹1,16,000 to each invoice and book ₹4,000 as TDS receivable. Check it later in your tax credit statement.
What do I tell the customer, and how do I record the money meanwhile?
Tell the customer what you received: the amount, the date and the UTR. Ask which invoices it covers. Hold any payment reminder for those invoices until you hear back.
In the books, post the receipt to the customer’s account as an on-account (unapplied) receipt. The customer’s total balance is then right, even if individual invoices are not yet closed. Apply it as soon as the payment advice arrives.
Review on-account receipts weekly. One left for 90 days is how a ₹1,18,000 invoice ends up chased twice and a customer relationship gets strained.
What to read next
When this happens every week, it is a cash application problem. Read what is cash application next, then invoice matching for TDS net versus gross amounts. If the customer paid less and nobody can explain why, use a short payment register. See also the Seven Classes of Reconciliation Leakage.
TransactIG matches bank statement credits to your books and reconciles TDS, and puts receipts it cannot match into an exception queue instead of leaving them unapplied.