Supplier Statement and Reconciliation

In this section, we will look at what supplier statements are and how to reconcile them. You will find both examples and a free Excel template to complete your reconciliations.

The easiest way to keep track of how much you owe a supplier is by using accounting software.

 

Supplier Statement of Account

A supplier statement is an accounting source document. When a supplier issues goods or services on credit, they issue an invoice. A statement of account shows all the outstanding invoices and credit notes at a given date. Usually, the issue of statements is at a month-end.

It is worth taking the time to check the statements and reconciling them. A reconciliation will show any differences from your accounting system to their statement. For a small company only receiving a few purchase invoices, this is a simple process to complete. It may take some time for a large company, especially if there are differences between the two accounts.

Why is it Important to Reconcile Supplier Statements

Some businesses will receive a statement but will not check them until they receive a demand for payment. You may think that completing the reconciliation is not essential, but keeping suppliers onside and keeping credit with them is. Losing credit with a supplier due to late payment may affect the cash flow of the company.

Supplier Statement Reconciliations

Below is a typical supplier statement reconciliations process.

  1. Using the accounting software open up the supplier statement and set the dates with the same period as the supplier statement. Xero does not have the feature for supplier statements, but it will provide a list of the invoices owed if you click on the supplier. Quickbooks has a report supplier balance detail.
  2. The starting point is to agree with the opening balance on both accounts. If there is a difference, then you may need to check back to the previous month.
  3. Check if there are any credit notes open on the accounting software; if there are, now is the time to allocate them.
  4. Check the end balances on both statements; you have completed the reconciliation if they are the same. If there is a difference between the two, you will need to find the difference.
  5. To find any differences, go down each line and tick off everything that is on both. Any transactions remaining will need listing in the reconciliation.
  6. Correct any differences that you have and ensure that the two now balance.

Supplier Statement Differences

There may be several reasons for differences between the two statements, including:

  • Invoices not received or posted to the account. If they are not received, request a copy invoice.
  • Timing difference. You may have made a payment that does not appear on the statement as it is received later. If it is a payment over a week old, it is worth checking with the supplier if they have received it.
  • Human Errors. As with most things, it is possible to make a human error. An invoice might be posted for the wrong amount or a discount omitted. Adjust the supplier invoice in the accounting software for any differences. The transaction may have been posted to the wrong supplier; if you think this has happened, complete a transaction search for the amount.

Once you resolve all the differences, recheck the final balance and ensure that they are equal. If they are, your reconciliation is complete.

Supplier Statement Reconciliation Template Excel

The download for the supplier statement reconciliation template is available at the end of this page.

Instructions for use

  • Open the spreadsheet in Microsoft Excel or an alternative spreadsheet package.
  • Enter the balance as per the accounting software
  • In the top section, enter any payments made, which are not on the supplier statements.
  • In the bottom section, enter any invoices or credit notes which are not on your accounting software.
  • Enter the supplier balance
  • Once complete, check that the end balance equals the balance as per the supplier statement. There is a check figure for the difference; this makes it easier to see the amount of any discrepancy.

Below we have created an example using a demo supplier statement. Here is the statement from the supplier:

Supplier Statement Example

The Accounting software shows a balance of £1226.25, so there is a difference of £1639.52.

Now it is time to use the reconciliation template.

Supplier Statement Reconcilation Template Excel

There is an uncleared payment of £1652.52 in the top section – it is a timing issue between when the statement was issued and customer payment.

In the bottom section, a credit note and an invoice is missing from the accounts. As they were not at the month-end, it is worth requesting copies.

There is a check box at the bottom of the template, which shows a difference of 0.00. You, therefore, know that the account is reconciled.

Licence

When you download the free template, you agree to our licence agreement.

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