How to reconcile a supplier statement.

01Why and when to reconcile a supplier statement

A supplier statement is the supplier's own record of what you owe it. Reconciling it against your payables ledger is how you find what either side is missing before it turns into a late-payment dispute, a duplicate payment or an unclaimed input VAT deduction.

Reconcile when it matters most:

• At month end or quarter end, for the suppliers that make up most of the payables balance, as part of the close.
• Before a payment run, so you pay what is actually due and nothing twice.
• When a supplier chases an amount you cannot see in the ledger.
• At year end, for every material supplier, because the auditor will ask.

The statement is a summary. The invoices and credit notes behind it are the documents that support the entries and the VAT, so the reconciliation always ends in documents, not in the statement.

02Before you match anything

Four checks first, because a reconciliation of two lists that do not cover the same thing cannot succeed.

• The same date. Print or export the supplier's account from your ledger at the statement date, not today.
• The same supplier. If the supplier appears twice in the ledger, under two spellings or two VAT numbers, merge the view before you start, or you will reconcile half of it.
• The same currency. A statement in another currency is reconciled in that currency first; exchange differences are a separate line, not an error.
• The opening balance agrees. The balance brought forward on the statement should equal the balance on your last reconciliation. If it does not, the difference belongs to an earlier period and is resolved there first.

03Matching, and the five usual differences

Tick off every line that appears on both sides with the same reference and amount: invoices, credit notes and payments. Record a part-payment as a part-payment, and a single payment that covers several invoices against each of them, so the open balance per invoice stays right. What is left is the work, and it is usually one of five things:

• An invoice on the statement, not in the ledger. The invoice never reached you, or it is in a pile nobody has entered. Ask for a copy; do not post from the statement line.
• A credit note on the statement, not in the ledger. The same, with the opposite sign: you are paying more than you owe until it is posted.
• A payment in the ledger, not on the statement. Usually timing: a payment made near the statement date that the supplier has not yet applied. List it with its date; it should clear next time.
• An invoice in the ledger twice. The same invoice entered from an email and again from the paper copy. Reverse the duplicate, with a note.
• An item on the wrong supplier. An invoice posted to a similarly named supplier. Move it, and check the other supplier's account too.

Differences in amount on a matched invoice are usually VAT-inclusive against VAT-exclusive figures, an early-payment discount, or a misread line. The original invoice decides which.

04Closing the reconciliation

The reconciliation is closed when it is written down in one line: the ledger balance, plus or minus each listed item, equals the statement balance. Then four things:

• Every open item has an owner and a date. Who is asking for the missing invoice, who is chasing the credit note.
• Nothing is adjusted without a document. A missing invoice is requested, not invented; a difference you cannot explain stays on the list.
• The file shows its working. The statement, the ledger report and the list of items are kept together, so the next reconciliation starts from this one.
• The open items carry forward as the first check of next period's reconciliation.

Most of the work sits in the documents, not the matching. Pileform reads supplier invoices and credit notes, groups them by supplier, and flags a document that has already been uploaded or already posted, so the same invoice does not enter the books twice; payments can be matched and allocated across invoices. A missing invoice can be requested from the client through client document collection, with a document request that tracks what came back. For the wider picture, see accounts payable automation and month-end close automation.