Balance Confirmation Letter Format

Balance confirmation letter format (copy and use)

Print this on your letterhead, attach a statement of account for the period, and send it by email and courier. The lower half is the confirmation slip the customer signs and returns. Keep the wording neutral: you are asking them to check their books, not making a demand, which is exactly why most customers sign it.

[YOUR COMPANY NAME]
[ADDRESS] | GSTIN: [YOUR GSTIN] | Phone: [PHONE] | Email: [EMAIL]

Ref. No.: [REF NO.]
Date: [DATE OF LETTER]

To,
[CUSTOMER NAME]
[CUSTOMER ADDRESS]
GSTIN: [CUSTOMER GSTIN]
Kind attention: [ACCOUNTS HEAD / PROPRIETOR NAME]

Subject: Confirmation of balance as on [CUT-OFF DATE]

Dear Sir/Madam,

As per our books of account, the balance in your account as on [CUT-OFF DATE] is Rs. [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only), payable by you to us.

A statement of your account for the period [FROM DATE] to [CUT-OFF DATE], showing invoices raised, payments received, credit notes and debit notes, is enclosed.

Please verify this balance with your books and return a copy of this letter, signed and stamped in the confirmation section below, within [7 / 15] days of receipt. If the balance does not agree with your books, please send us your statement of account for the same period with details of the difference so that we can reconcile it.

Thanking you,

For [YOUR COMPANY NAME]

[AUTHORISED SIGNATORY NAME]
[DESIGNATION]

Enclosure: Statement of account from [FROM DATE] to [CUT-OFF DATE]

------------------------------------------------------------
CONFIRMATION (to be completed by [CUSTOMER NAME])

[ ] We confirm that the balance of Rs. [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only) payable by us to [YOUR COMPANY NAME] as on [CUT-OFF DATE] is correct as per our books of account.

[ ] The balance as per our books as on [CUT-OFF DATE] is Rs. [THEIR FIGURE]. The difference of Rs. [DIFFERENCE] is explained in the attached reconciliation.

For [CUSTOMER NAME]

Signature: ____________________
Name: [NAME OF SIGNATORY]
Designation: [DESIGNATION]
Date: [DATE]
Company seal / stamp:

How to fill it

1. Pick the cut-off date. Year end (31 March) suits the audit; for recovery, any date works, and a quarterly confirmation for slow payers is better than an annual one.
2. Reconcile your own ledger first: post every invoice, payment, TDS deduction, credit note and debit note up to the cut-off date. A wrong figure is the commonest reason customers refuse to sign.
3. Write the amount in figures and words and say clearly that it is payable by the customer to you.
4. Attach the statement of account for the period so the customer can tick off entries.
5. Address it to a named person in accounts, and ask that the slip be signed by an authorised signatory (proprietor, partner, director or someone authorised by them) with the company stamp.
6. Send by email with the PDF and by courier or registered post, and keep proof of dispatch.

Common mistakes

• Relying on 'deemed confirmation'. A line saying 'if we do not hear from you, the balance will be treated as correct' may satisfy an auditor's process, but in law silence is not an acknowledgement. Only a signed reply extends limitation.
• Sending it after the 3-year period has expired. Section 18 works only if the acknowledgement is signed before limitation runs out. A signature after expiry does not revive the debt under Section 18, though a written promise to pay a time-barred debt can be enforceable under Section 25(3) of the Indian Contract Act.
• Accepting a signature from someone with no authority, such as a store clerk. Ask for the signatory's name and designation.
• Ignoring a disputed figure. If the customer returns a different balance, reconcile the difference in writing at once; the undisputed part is still an acknowledgement.
• Leaving out TDS. Customers deduct TDS and show a lower balance; book the TDS credit so the figures match.

What a signed confirmation does if the customer later does not pay

Under Section 18 of the Limitation Act, a written acknowledgement of liability, signed by the debtor before the period expires, gives a fresh limitation period computed from the date of signing. For an ordinary supply debt the period is 3 years, so a confirmation signed every March keeps old invoices alive indefinitely. Courts have also held that the acknowledgement need not state the exact amount, provided it admits a subsisting liability.

It is also the best answer to the defences buyers raise later: 'we never received the goods', 'the rate was different', 'we don't owe that much'. A customer who signed a balance confirmation will struggle to dispute the same balance in a legal notice reply, an MSME Samadhaan claim or a summary suit under Order XXXVII. Check how much time you have left with the limitation period calculator.

If a customer has confirmed the balance but still not paid, a legal notice from an advocate is the usual next step. Through FundRaksha Legal the notice goes out within 24 hours, with the signed confirmation attached, and the fee is 30% of what is recovered, nothing upfront. Book a free consultation to have the documents reviewed.