Suspense accounts help you avoid recording transactions in the wrong accounts. You also avoid failing to record a transaction because of missing information. Later, you decide to bill the supplies account of the purchasing department. To close the suspense account, credit the suspense account and debit the supplies account for the purchasing department.
Integrate with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital. Make the most of your team’s time by automating accounts receivables tasks and using data to drive priority, action, and results. Understand customer data and performance behaviors to minimize suspense account the risk of bad debt and the impact of late payments. Monitor changes in real time to identify and analyze customer risk signals. Transform your order-to-cash cycle and speed up your cash application process by instantly matching and accurately applying customer payments to customer invoices in your ERP.
A quick definition of suspense account:
Accelerate dispute resolution with automated workflows and maintain customer relationships with operational reporting. Unlock full control and visibility of disputes and provide better insight into how they impact KPIs, such as DSO and aged debt provisions. Create, review, and approve journals, then electronically certify, post them to and store them with all supporting documentation. Automatically create, populate, and post journals to your ERP based on your rules. Add suspense account to one of your lists below, or create a new one. As soon as possible, the amount(s) in the suspense account should be moved to the proper account(s).
Calculate and identify account balance and activity fluctuations automatically to continuously monitor for risk, ensure the effective and timely execution of critical management review controls, and support agile decision-making. It can be a repository for monetary transactions (cash receipts, cash disbursements and journal entries) entered with invalid account numbers. If one of these conditions applies, the transaction should be directed to a suspense account. Identifying an amount shouldn’t be an impossible task (if so, it may suggest fraud).
Suspense Account Explained
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Suspense account definition
In branchless banking (BB) – banking through mobile for the unbanked – these accounts are used for ‚money-in-transit‘. For example, sender sends payment from US ACH account to a BB mobile number in Japan. The customer receives an alert on their mobile to withdraw this money from a BB agent. Until they withdraw, the remittance stays in a suspense account, earning the financial institute or the BB enabler float/interest on that money. When customer withdrawal is completed, the money moves from the suspense account to the account of the agent who facilitated the cash withdrawal.
There was one transaction whose nature could not be ascertained at recording. The accountant recorded the “unclassified” amount in the general ledger suspense account to complete the assignment by the deadline. A suspense account is a general ledger account in which amounts are temporarily recorded.
What Is a Suspense Account?
In the business world generally, a suspense account is a section of a company’s financial books where it can record ambiguous entries that need further analysis to determine their proper classification. In mortgage servicing, the servicer can use a suspense account to park funds temporarily if a borrower has made only a partial payment for that month. In investing, a suspense account is a type of brokerage account where a customer’s proceeds from selling an investment may be recorded until the customer uses the money to invest in something else. Adjusting Entries are used to correct mistakes, whereas suspense accounts are useful for temporarily holding transactions until there is enough information to post them.
What is an example of a suspense account?
The company sends $50 in payment to the client, but the client's accountant realizes the amount may be inaccurate and should be closer to $500. The accountant debits the $50 from a cash account and credits the $50 to a suspense account until the accountant can get more information.
A suspense account is one that temporarily records transactions that have yet to be assigned to their proper accounts. The suspense account is situated on the general ledger and is used to temporarily store specific transaction amounts. Having said that, any sums recorded in this account will ultimately be transferred to another permanent account. A suspense account is the general ledger account that the company uses for recording transactions temporarily. When recording those transactions, the accountant may be unsure of the type of account most appropriate to record those transactions. It helps companies keep their accounting books in an organized manner.