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Supplier Statement Reconciliation: A Practical Guide
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A supplier statement reconciliation compares what a supplier says you owe with what your purchase ledger shows. It finds missing invoices, duplicate entries and unapplied payments, before they turn into late-payment disputes or misstated liabilities.
Why balances differ
- Invoices in transit. The supplier has issued an invoice that you have not yet received or booked.
- Payments in transit. You have paid, but the supplier has not yet recorded the receipt.
- Disputed items. You rejected goods or an invoice, and no credit note has been issued.
- Duplicates. An invoice was entered twice, on either side.
- Unapplied credits. A credit note exists but has not been matched.
- Differences in amount. Discounts, currency rates or rounding on tax.
The process
- Obtain a statement at a clear cut-off date, and extract your ledger for the same supplier and date.
- Note both closing balances. Remember the signs: your payable is the supplier's receivable.
- Match by document number, then by amount and date where references differ.
- List the remaining items with a reason for each, such as timing, dispute or error.
- Correct your errors, and ask the supplier to correct theirs.
- Check the adjusted balances agree, and have someone review the result.
A worked example
| Supplier statement | Amount |
|---|---|
| Balance per supplier | 18,600 |
| Less: our payment not yet on their statement | (5,000) |
| Less: duplicate invoice on their statement | (1,200) |
| Adjusted supplier balance | 12,400 |
| Purchase ledger | Amount |
|---|---|
| Balance per ledger | 11,300 |
| Add: invoice on their statement, not yet booked | 1,500 |
| Less: credit note received, not yet booked | (400) |
| Adjusted ledger balance | 12,400 |
Which suppliers to reconcile
You rarely need to reconcile every supplier every month. A sensible approach is:
- Monthly: your largest suppliers by value, and any with open disputes
- Quarterly: mid-sized suppliers
- At year end, or when something looks wrong: everyone else, by sample
Your auditors may ask for supplier confirmations at year end, so regular reconciliation makes that work easier.
Good practice
- Do not pay from a statement alone. Pay against approved invoices.
- Follow up old differences with a named person and a date.
- Keep a copy of the statement with the reconciliation.
- Ask the supplier's accounts team for statements directly, and watch for sudden changes to bank details, a common sign of fraud.
Doing it in software
Closentry reconciles supplier statements in the same way as bank statements. Load the statement and your ledger, in Excel, CSV or PDF, and it matches by reference and amount, then lists what remains so you can give each item a reason. Customer statements work the same way.