Send a statement of account and a confirmation letter to every customer and supplier with a balance as on 31 March, in the first two weeks of April. Ask them to sign and return it or point out differences within 15 days. Reconcile differences invoice by invoice. A confirmation signed by the debtor is an acknowledgement of debt under Section 18 of the Limitation Act, which starts a fresh three-year period for recovery from the date it is signed.
How to run it
- Close the ledger for 31 March: book every invoice, receipt, credit note and TDS entry first.
- Make a statement of account for each party: opening balance, invoices, payments, adjustments and closing balance. A statement of account format helps.
- Send the confirmation letter with the statement, by email and post, to the accounts head. Use the balance confirmation letter format or the Hindi version.
- Ask for a reply in 15 days: signature and stamp if agreed, or a list of differences.
- Reconcile differences invoice by invoice and send a revised statement.
- File the signed copies. They go to your auditor and, for any slow payer, into the recovery file.
| Common difference | What to do |
|---|---|
| TDS deducted by the customer | Check Form 26AS or the TDS certificate and book it |
| Credit note or discount not booked on one side | Agree it and issue or book the credit note |
| Payment in transit on 31 March | Show it as a reconciling item with the UTR number |
| Disputed invoice | Record it separately; the undisputed balance should still be confirmed |
| Invoice not received by the buyer | Resend the invoice with proof of delivery |
Why a signed confirmation protects your money
The time limit to sue for an unpaid invoice is three years from the due date (see limitation period). Under Section 18 of the Limitation Act, an acknowledgement of liability signed by the debtor before that period expires starts a fresh period from the date of signing. A year-end balance confirmation signed by the buyer is exactly such an acknowledgement, so running confirmations every year keeps old dues alive. See acknowledgement of debt.
For micro and small suppliers there is a second benefit: buyers who sign a confirmation that shows invoices past 45 days have little room to argue later that the goods were never accepted, which matters for an MSMED Act claim.
Worked example (hypothetical)
A Surat fabric supplier's ledger shows ₹3,72,500 due from a Mumbai garment maker on 31 March 2027. The oldest open invoice is dated 10 May 2024, due 9 June 2024, so limitation for it would end around 9 June 2027.
- The supplier sends the statement and letter on 5 April 2027.
- The buyer replies on 15 April confirming ₹3,40,000 and disputing ₹32,500, which it says is a rate difference credit note not yet issued.
- The supplier checks, agrees ₹20,000 of it, issues a credit note and revises the balance to ₹3,52,500; the buyer signs the revised confirmation on 22 April.
- The signed confirmation on 22 April 2027 restarts the three-year period: the supplier now has until about 22 April 2030 to sue on the confirmed balance, including the May 2024 invoice.
Check dates with the limitation period calculator.
Edge cases
- Buyer refuses to sign: keep proof you sent it. Silence is not an acknowledgement, but a reply email that admits the amount can be.
- Signed by the wrong person: the acknowledgement should be signed by the debtor or someone authorised by it, such as the accounts head or a director.
- Limitation already expired: a fresh acknowledgement after expiry does not revive the old period under Section 18, though a written promise to pay may be enforceable under contract law; take advice.
- Confirmation shows a lower figure: the signed figure is the acknowledged debt; pursue the difference separately.
If a customer will not confirm and will not pay, that is usually the moment for a legal notice. A free consultation will tell you whether your oldest invoices are still in time.
Sources
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.