Supplier statement reconciliation: explain each difference before paying
Consider an example in which a supplier's month-end statement says you owe 7,600 while your ledger account for the same supplier says 6,400. Posting the 1,200 gap as an extra expense would make the balances agree while leaving the actual differences unexplained and the ledger wrong. The statement is the supplier's view of the account and the ledger is yours, so each difference needs tracing to a specific invoice, credit or payment before anyone posts an entry or approves a payment.
Compare like with like
ACCA explains that the statement a supplier sends can be compared with the buyer's own account for that supplier. It lists typical causes of differences, including payments the supplier has not yet received, invoices posted to the wrong supplier account, credits not yet processed and data-entry errors. It also points out that either party's records can be wrong. Some differences are timing and clear on their own. Others are errors someone has to correct.
Before comparing lines, confirm that both documents cover the same legal entity, supplier account, currency and cutoff date, and agree the opening balance. A report from your own system titled supplier statement is still your data, so it cannot provide this external check.
Sources and context, checked :
A worked reconciliation
In this hypothetical case, both balances are at the same cutoff, for the same entity and in the same currency. Three evidenced differences explain the 1,200 gap.
The adjusted ledger is 6,400 + 900 - 300 = 7,000. On the reconciliation workpaper, the statement less the payment it has not yet reflected is 7,600 - 600 = 7,000. That 600 adjustment exists only in your workpaper. The supplier's statement stays as issued, and the supplier updates its own account once it confirms the payment.
| Difference | Evidence | Treatment |
|---|---|---|
| Invoice for 900 on the statement, missing from your ledger | Invoice, delivery record and approval; no posted bill or accrual already covers it | Record the purchase through the normal approval route. Ledger rises by 900. |
| Credit note for 300 on the statement, missing from your ledger | Credit note matched to the original purchase | Record the credit against that purchase. Ledger falls by 300. |
| Payment of 600 in your ledger, not yet on the statement | Remittance advice and bank debit before cutoff | Show as a reconciling item and ask the supplier to confirm receipt. Post nothing new. |
Check what is already booked
The 900 invoice is the line most at risk of being counted twice. Before entering it, search for a posted bill under another supplier record, a draft awaiting approval, or a month-end accrual made because the goods arrived before the invoice. Check how any existing entry should be matched, reversed or reclassified before recording the invoice, so the cost appears only once.
A matching total can also hide allocation problems. If the supplier received your payment but applied it to a different invoice, the balances agree while individual invoices still look unpaid on their side. Comparing open items as well as totals brings that out early.
Keep unresolved items moving
Some lines will not clear in one sitting. We recommend giving each unresolved item a reference, the evidence gathered so far, an owner and a next action, and making payment decisions within your agreed terms and approval limits. A dispute over one invoice is a reason to review that invoice. It does not by itself justify holding every payment to the supplier.
Before the next payment run, start with the supplier whose statement differs most from your ledger. Agree the opening balance, then work line by line until every gap has a document and an owner.