A suspense account is a temporary holding account for transactions the bookkeeper could not identify or classify. Used properly it is emptied within days. A suspense account carrying a large or growing balance means real income, real expenses or real errors are sitting unclassified in your books — and it is one of the first things a SARS auditor looks at.
The account itself is not the problem. Everything still in it is.
What it is for
During bookkeeping, some transactions cannot be classified immediately:
A deposit with no reference and no matching invoice
A payment to a beneficiary nobody recognises
An amount that does not agree to any supporting document
A transaction awaiting information from you
Rather than guessing, the bookkeeper posts it to suspense and follows up.
That is correct practice. Guessing produces a wrong number that looks right, which is considerably worse than a flagged number that looks wrong.
The rule that makes it work: every item in suspense is temporary and must be cleared. A suspense account should be empty at the end of every month.
Why a balance is a problem
It means your numbers are wrong
An unidentified deposit is probably income you have not recorded — which means understated revenue and, if you are VAT-registered, understated output VAT.
An unidentified payment is probably an expense you have not claimed — a lost deduction and lost input VAT.
Either way your profit is wrong, and so is any decision made from it.
It is a SARS flag
On a VAT verification, a large suspense balance suggests transactions that were never properly accounted for. SARS's reasonable position is that unidentified deposits are income until you prove otherwise.
On an income tax verification, unclassified amounts undermine the credibility of the whole return.
The burden of proof sits with you. "We could not identify it" is not an answer that improves the outcome.
It hides real problems
A suspense account is exactly where an unauthorised payment sits undetected. In a business where one person handles both payments and bookkeeping, the suspense account is often the only place an irregularity would surface — and only if someone looks.
It compounds
Items in suspense get harder to identify with time. A transaction from last week can be resolved with a phone call. One from fourteen months ago, where the person involved has left, frequently cannot be resolved at all.
How to clear one
1. Print the detail, not the balance. You need every line: date, amount, description, and which side of the account it sits on.
2. Sort by size. The largest items usually explain most of the balance and are worth the most effort.
3. Work through the identifiable ones:
| Type | How to identify it |
|---|---|
| Unidentified deposits | Match against your debtors list, then against invoices issued around that date. Ask the bank for the payer details |
| Unidentified payments | Check the beneficiary name against your supplier list and your card statements |
| Duplicated amounts | Look for the same value posted twice on nearby dates |
| Reversals | Bounced payments and reversed debit orders often land in suspense |
| Owner transactions | Frequently personal spending on the business card, which belongs on the loan account rather than in expenses |
4. Ask the bank. For an unidentified deposit, your bank can usually confirm the paying account name. This resolves more items than anything else.
5. Deal with what genuinely cannot be identified. Where an amount is small and old, it may have to be written off to a clearly labelled account — but only after real effort, and it should be documented. Where it is material, take advice before writing anything off, because an unidentified deposit written off as income has a different tax consequence from one written off as an error.
6. Fix the cause. If items keep landing in suspense, the process upstream is broken — customers not using references, no invoices issued for some sales, the business card used personally.
The habits that keep it empty
Reconcile weekly, not monthly. Identification gets exponentially harder with time. See what is a bank reconciliation.
Insist on payment references. Put the invoice number on the invoice as the reference to use, prominently.
Invoice everything, immediately. An unmatched deposit is usually a sale nobody invoiced.
Stop using the business card personally. The single largest source of unidentifiable transactions in owner-managed businesses. If it happens, repay it immediately rather than letting it sit.
Answer your bookkeeper's queries within the week. Most suspense balances are not the bookkeeper's failure — they are a list of questions nobody answered.
Review the suspense balance monthly. Add it to your management accounts pack. If it is not zero, ask why.
Frequently asked questions
What is a suspense account? A temporary holding account for transactions that could not be identified or classified at the time of processing. It is correct practice to use one rather than guessing, but every item should be cleared within days.
Is a suspense account bad? The account is not, but a balance in it is. Anything sitting in suspense means income, expenses or errors have not been properly accounted for, which makes your profit, VAT and tax figures unreliable.
What should the balance of a suspense account be? Zero, at the end of every month. Items should be investigated and cleared as they arise rather than accumulating.
Why does SARS care about suspense accounts? Because unidentified amounts undermine the credibility of a return. On a VAT verification, SARS's reasonable position is that unidentified deposits are income until proven otherwise, and the burden of proof sits with the taxpayer.
How do I clear a suspense account? Print the transaction detail rather than the balance, sort by size, and work through each item — matching deposits against debtors and invoices, checking payment beneficiaries against supplier lists, and asking your bank to confirm the paying account for unidentified deposits.
What causes items to end up in suspense? Customers paying without references, sales that were never invoiced, personal spending on the business card, bounced payments and reversals, and queries the bookkeeper raised that nobody answered.
An empty suspense account is a sign of a clean set of books
It is a small indicator that tells you a great deal. A business whose suspense account is empty every month is a business where transactions are identified, queries are answered and the reconciliation actually happens.
Smartbook reconciles weekly, raises queries promptly, and reports the suspense balance in monthly management accounts — so it never becomes an eleven-month archaeology problem.
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Writing off unidentified amounts has tax consequences that depend on the nature of the item — take advice where the amount is material. General guidance, not advice on your circumstances.