Supplier statement reconciliation
Comparing a supplier's statement of account with your own payables records, and explaining every difference.
In short
- It catches missing invoices, unrecorded credits, duplicate payments and misapplied payments.
- Most differences are timing: items in transit between the two sets of books.
- Regular reconciliation with key suppliers prevents disputes and surprises at year end.
A supplier statement reconciliation checks that what a supplier says you owe matches what your records say you owe. Suppliers send statements listing invoices, credit notes and payments on your account. AP compares that list with the supplier's balance in the payables ledger and works through each difference.
Typical differences
- Invoices on the statement but not in your books: lost, sent to the wrong address or still waiting for approval.
- Payments in transit: you paid, but the supplier had not applied it by the statement date.
- Credit notes: issued by the supplier but not recorded by you, or claimed by you and not yet issued.
- Duplicates: an invoice recorded or paid twice.
- Misapplied payments: the supplier applied your payment to the wrong invoice.
Why it matters
Reconciliation finds problems while they are small. A missing invoice found now can still be paid on time; found in six months, it comes with a late fee and an annoyed supplier. It also catches double payments, which are much easier to recover quickly. At year end, auditors often ask for statement reconciliations for major suppliers to confirm payables are complete.
Worked example
A $14,200 difference
A supplier's statement shows $48,600 owing. The payables ledger shows $34,400. The $14,200 difference breaks down into two invoices totalling $11,500 sent to a former employee's email and never entered, plus a $2,700 payment made on the 30th that the supplier had not yet applied. The two invoices are entered and approved, and the balances agree.