A supplier statement is a summary of all transactions between a business and its supplier over a specified period, including invoices issued, payments made, and any credits or refunds issued. Checking and reconciling a supplier statement is crucial for ensuring financial accuracy. This process involves comparing the statement against your business’s records, investigating discrepancies, reconciling balances, following up on outstanding amounts, and maintaining thorough records. By carefully following these steps, businesses can ensure timely and accurate payments, avoid errors, and strengthen relationships with suppliers.
Supplier Statement
A supplier statement, also known as a supplier account statement, is a key financial document that provides a summary of all transactions between a business and its supplier over a specified period. The statement includes details on invoices issued by the supplier, payments made by the business, and any credits or refunds issued by the supplier. Ensuring that these statements are accurate is crucial for maintaining good supplier relationships, avoiding discrepancies, and ensuring correct financial reporting.
Steps for Checking a Supplier Statement
Properly checking a supplier statement requires a systematic process to ensure that the information aligns with the business’s own records. Here’s a breakdown of the steps to follow:
Step 1: Collect the Supplier Statement
The first step in checking a supplier statement is to obtain a copy of the statement from your supplier. Statements usually cover a period, such as a month, quarter, or other agreed-upon timeframes. You can receive the statement by email, through your accounting software, or in physical form. Ensure that it contains all transactions, including invoices, payments, and any outstanding balances.
Step 2: Compare the Statement to Your Records
Next, review the statement by comparing it to your own records. This includes checking invoices, receipts, and payment histories. Make sure that every invoice listed in the supplier statement matches your purchase records, and verify that the payments made are correctly recorded. This will help you ensure that all transactions are accurately reflected in both your records and the supplier’s statement.
Step 3: Check for Discrepancies
Discrepancies can arise when the statement and your records do not match. Common discrepancies include:
- Missing or incorrect invoices
- Duplicate invoices
- Overpayments or underpayments
For example: if an invoice amount is listed incorrectly—such as $2,000 instead of $200—it should be flagged immediately. Reach out to the supplier to investigate the discrepancy and request a corrected statement.
Step 4: Reconcile the Supplier Statement
Once any discrepancies are identified and corrected, the next step is reconciling the statement with your records. This means ensuring that all transactions, including invoices, payments, and any credits, are accounted for, and that the final balance matches the amount you owe or have paid. The balance shown in the statement should align with your records to avoid any confusion or errors in future transactions.
Step 5: Follow Up on Any Outstanding Balances
After reconciling the statement, if there is still an outstanding balance, it’s essential to follow up promptly. If a certain amount is shown as outstanding, verify whether it is due (and if so, when it is due), has already been paid but not recorded, or if there is an error. Contact the supplier for clarification, provide proof of payment if needed, and resolve any discrepancies to prevent future issues. Timely payments are crucial for maintaining good supplier relationships and avoiding late fees or penalties.
Step 6: Keep Accurate Records
One of the most important practices in managing supplier statements is to keep detailed records. Store copies of all invoices, receipts, statements, and communications related to supplier transactions. Accurate record-keeping ensures that discrepancies can be quickly identified and resolved, and supports effective audits and financial management. You can use accounting software like QuickBooks, Xero, or Sage to maintain and track all supplier transactions.
Example of a Supplier Statement
Consider the following example where a business receives a supplier statement from a supplier. Here’s a snapshot of the statement covering two months:
| Date | Invoice # | Description | Amount | Payment Received | Outstanding Balance |
|---|---|---|---|---|---|
| 2023-01-01 | INV-001 | Goods Purchased on Credit | $1,000 | – | $1,000 |
| 2023-01-15 | INV-002 | Goods Purchased on Credit | $2,000 | – | $3,000 |
| 2023-01-20 | INV-003 | Goods Purchased on Credit | $500 | – | $3,500 |
| 2023-01-25 | PAY-001 | Payment for INV-001 | – | $500 | $3,000 |
| 2023-02-01 | INV-004 | Goods Purchased on Credit | $1,500 | – | $4,500 |
| 2023-02-10 | PAY-002 | Payment for INV-002 | – | $1,000 | $3,500 |
| 2023-02-15 | INV-005 | Goods Purchased on Credit | $2,000 | – | $5,500 |
| 2023-02-20 | INV-006 | Goods Purchased on Credit | $1,000 | – | $6,500 |
| 2023-02-25 | PAY-003 | Payment for INV-001 | – | $500 | $6,000 |
Example Scenario: Let’s assume you find a discrepancy where INV-002 should be $1,800 instead of $2,000. In this case, you would contact the supplier, notify them of the error, and request a corrected statement. After the correction, you would reconcile the new figures with your own records.
Key Takeaways
- Supplier statement reconciliation is crucial for ensuring financial accuracy and maintaining good supplier relationships.
- Start by collecting the statement, then compare it to your records to identify discrepancies.
- Resolve discrepancies by contacting the supplier for any adjustments needed.
- Reconcile the statement once discrepancies are cleared to ensure all balances align.
- Always keep accurate records for future reference and audits.
- Timely payment of outstanding balances helps avoid penalties and fosters positive business relationships.
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