---
title: "Party (counterparty)"
description: "What a party or counterparty is in accounting software, how tagging entry lines with customers and suppliers gives balances per counterparty, with an example."
canonical: https://ledgeriano.com/glossary/party
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# Party (counterparty)

> What a party or counterparty is in accounting software, how tagging entry lines with customers and suppliers gives balances per counterparty, with an example.

A party, or counterparty, is a customer, supplier, employee or other person or company the business deals with. Tagging journal entry lines with a party lets the books show receivable and payable balances, statements of account and ageing per counterparty, while the chart of accounts keeps a single receivables and a single payables account.

Parties replace the old practice of opening a ledger account for each customer. One counterparty can appear on many accounts: a supplier may have a payable, an advance paid and a deposit, all visible together on the party's statement.

Make the party mandatory on control accounts such as receivables, payables, advances and related-party balances. Without it, the per-customer [subsidiary ledger](https://ledgeriano.com/glossary/subsidiary-ledger) cannot be reconciled to the general ledger.

In Ledgeriano parties are created per business with codes, contact details and tax numbers, and party balance reports come straight from posted lines.

## Example: one supplier on two accounts

An advance of 2,000 is paid to a supplier, then a bill of 5,000 is booked. The party statement shows a net 3,000 owed.

| Account | Party | Debit | Credit |
| --- | --- | --- | --- |
| Advances to suppliers | Northwind Parts | 2,000 |  |
| Accounts payable | Northwind Parts |  | 5,000 |

### Is a party the same as a customer account?

A party is broader. The same party can be a customer and a supplier, and its balances can sit on several accounts.

### Should employees be parties?

Yes, if you track advances, loans or expense claims per employee.