A supplier statement shows what the supplier thinks you owe. Your purchase ledger shows what you think you owe. When the two disagree, one side is missing something, and it is better to find out before a payment run or a year end.
Which suppliers to reconcile
Reconciling every statement every month is rarely worthwhile. Focus on:
- the largest suppliers by spend;
- suppliers with frequent invoices and credit notes;
- any supplier whose statement shows overdue items you do not recognise;
- every supplier at the year end, at least for material balances.
Step by step
- Agree the statement date to the ledger date and take both balances.
- Tick matching items: invoices, credit notes and payments that appear on both.
- List the unmatched items on each side.
- Explain each difference and decide who must act.
- Correct your ledger where you are wrong; ask the supplier to correct theirs where they are.
Typical differences
| On the statement only | Usual cause | Action |
|---|---|---|
| Invoice | not received, lost in an inbox, or awaiting approval | obtain a copy, approve and post |
| Credit note | goods returned but credit not posted | post the credit note |
| Late payment charge | interest under late payment legislation or contract terms | check entitlement; post or dispute |
| In your ledger only | Usual cause | Action |
|---|---|---|
| Payment | in transit at the statement date, or allocated to the wrong supplier | timing difference or reallocate |
| Invoice | duplicate posting, or another supplier’s invoice | reverse the error |
| Debit note or deduction | you claimed a credit the supplier has not agreed | chase the supplier |
Example
A statement at 31 March shows £14,600. The purchase ledger shows £12,980.
| Item | Amount |
|---|---|
| Ledger balance | £12,980 |
| Add: invoice 4471 not yet received | £2,140 |
| Less: payment of 30 March not yet on supplier’s statement | –£520 |
| Statement balance | £14,600 |
Invoice 4471 is obtained and posted (with its VAT, if valid). The payment is a timing difference and needs no action.
VAT and cut-off
Missing invoices are missing input VAT; post them when the VAT invoice is held, not when the statement arrives. At the year end, goods received but not invoiced belong in accruals even if the invoice has not appeared. A statement is not a VAT invoice and cannot support a reclaim.
Keep the evidence
Save the statement with your reconciliation note showing the explained differences and who resolved them. Auditors and HMRC both treat a reconciled supplier statement as strong evidence of the creditors figure.
For the customer side, see customer statement reconciliation; for the creditors account itself, trade creditors in the chart of accounts.