Reconciling a supplier statement to your books
How to reconcile a supplier's statement to your own records line by line, tell timing differences from real errors, and fix the usual causes.
By Achekam · · 5 min read · For Running a business businesses in South Africa, Nigeria, Kenya
At the start of each month, the statements arrive: one from the wholesaler, one from the fuel company, one from the packaging supplier. Each shows a balance the supplier says you owe. Your books show a different figure. Most businesses either pay what the statement says, which means paying for the supplier's mistakes, or pay what their own books say, which means a supplier eventually stops delivering over an unpaid invoice nobody noticed.
A supplier statement reconciliation settles the difference before money moves. It is unglamorous work, but it is one of the cheapest controls a business has: it catches errors on both sides, and it is often the first place a duplicate payment or a missing credit note shows up.
Why each supplier is checked on its own
ACCA explains that separate, accurate records must be kept for each supplier, because the trade payables control balance shows only the total owed to all credit suppliers. That total can look right while individual accounts are badly wrong: an overpayment to one supplier can hide an underpayment to another.
So the reconciliation is done supplier by supplier, against that supplier's statement, not against the total in the balance sheet.
Reading a supplier statement
ACCA describes a supplier statement as a document covering a set period that shows the opening balance owed, the invoices, credit notes and payments in that period, and the closing balance. It is the supplier's version of your account with them, and you can use it to check your own records.
Read it in four parts:
- Opening balance. Does it agree with last month's reconciled closing figure? If not, last month's differences have not been cleared.
- Invoices. Each one by number, date and amount.
- Credit notes. Each one, with the invoice it relates to.
- Payments. Each one by date and amount, as the supplier has received it.
Then compare each line with your own record of that supplier.
Timing differences versus real errors
Not every difference is a mistake. ACCA explains that a payment you have sent but the supplier has not yet received is a timing difference rather than an error, and it will clear when the supplier records the payment.
The same applies in reverse to an invoice the supplier has issued near month-end that has not reached you yet. Timing differences need no correction; they need a note, and a check next month that they cleared.
A real error needs a correction, in your books or the supplier's.
The usual culprits
ACCA lists the common reasons a supplier statement differs from the customer's own records:
| Cause | What it looks like | What to do |
|---|---|---|
| Payment not yet received by the supplier | Your payment missing from their statement | Note as timing; check it appears next month |
| Invoice posted to the wrong supplier | An invoice on their statement you have under another name | Move it to the right supplier in your books |
| Credit or debit note not processed | A credit on their statement missing from yours, or the reverse | Get the note and record it, or ask them to issue it |
| Discount not accounted for correctly | A small difference on a paid invoice | Agree whether the discount was earned, and adjust |
| Transposition error | Two digits swapped in an amount | Correct whichever side has it wrong |
A useful tip for the last one: when a difference divides exactly by nine, a transposition is a likely cause.
Watch also for invoices on your books that are missing from the statement. Sometimes that means the supplier made a mistake; sometimes it means the invoice was entered twice on your side.
Finding the supplier's bills and payments in Achekam
In Achekam, a business keeps one supplier list with duplicate checks by name or VAT number, and quotations, orders and bills pick suppliers from it. That matters here: if the same supplier exists twice in your books, its invoices and payments split across two records and the reconciliation never balances.
Supplier bills are recorded line by line with VAT. A bill without a purchase order waits for approval before it posts, and a bill can be paid in full or in parts from a chosen bank account. Where you use procurement, posting a matched supplier invoice puts it in the ledger as expense, input VAT and trade payables, and the supplier's invoice number stops it being posted twice, which removes one common source of differences.
The general ledger lists every posted line, so you can trace any bill or payment to its journal. When a correction is needed, such as a missing credit note or a payment posted to the wrong supplier, a manual journal records it; Achekam refuses an unbalanced journal or one dated in a closed month, and a posted journal is corrected only by a reversal, so every correction stays visible.
A monthly routine before the payment run
ACCA advises that reconciling to supplier statements helps spot errors early, reduces the risk of paying suppliers late or paying the wrong amounts, and supports good supplier relationships. Do it before you pay, not after:
- Collect statements for every supplier you will pay this month, and for any large supplier even if no payment is due.
- Reconcile each one: opening balance, invoices, credits, payments, closing balance.
- Sort each difference into timing or error, and note it on the statement.
- Correct your own errors before the payment run.
- Write to the supplier about theirs, and keep a copy.
- Pay what you agree you owe, not the statement's total.
- Keep the reconciled statement with the month's papers.
For examples, see paying counsel and correspondents in a law firm and a supplier invoice paid twice.
Learn more
ACCA's article on supplier statement reconciliations explains why a separate record of each credit supplier is kept and how the reconciliation finds errors. Start with your three largest suppliers this month, and add the rest once the routine is set.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
