Supplier statement reconciliation: a step-by-step guide

What is a supplier statement?

A supplier statement is a list of what the supplier says you owe them. It normally shows an opening balance, the invoices and credit notes raised in the period, payments they have received and a closing balance. Suppliers send one monthly or on request, and some have it in an online portal.

It is the supplier's version of your account. Your version is the purchase ledger: the bills, credit notes and payments you have recorded against that supplier. Reconciling means proving the two versions agree, and it is the check that catches a missed bill before the supplier chases it.

How do you reconcile a supplier statement?

1. Pick the statement date and pull your own ledger for the same supplier, up to that date. The sections below show how in Xero, QuickBooks Online and FreeAgent.
2. Compare the two closing balances. If they match, check a few lines anyway, because two errors can cancel out.
3. Tick every statement line against your ledger by invoice number and amount. Do not match on amount alone.
4. List the unticked lines on each side. Statement lines you cannot find are usually missing bills. Ledger lines missing from the statement are usually timing or your own mistakes.
5. Correct what is yours to correct: enter the missing bill, record the credit note, void the duplicate.
6. Query the rest with the supplier, quoting the invoice reference and amount, and keep the email.
7. Rebuild the balance. Ledger balance, plus or minus your corrections, should equal the statement balance. Any gap left is a line you have not found yet.

Worked example

This is an illustrative example. Harbour Office Supplies' statement at 30 September shows a balance of £3,560.00. Your ledger shows £4,130.00.

The corrected balance matches the statement. Enter INV-2066 and INV-2078 and record the credit note, all dated as the supplier dated them. Void the second INV-2071 so it does not get paid twice. Each line is a different kind of difference, which the next section covers.

Why the balances differ

• Missing invoices. The bill was emailed to the wrong person, sat in an inbox or was never sent. It is the most common cause and the reason to do the reconciliation.
• Credit notes. The supplier issued one and you have not recorded it, or you recorded a refund but not the credit note. See what a credit note is.
• Timing. The statement includes an invoice you have not received yet, or you paid before the statement date and the supplier has not posted the payment. Both clear by themselves. Confirm on the next statement.
• Duplicates. The same invoice entered twice, often from an emailed copy and a portal download. Match on invoice number, not amount: two genuine invoices can share a date and total. The duplicate invoices guide covers this.
• Payments and allocation. A payment recorded against the wrong supplier, or left unallocated.

How to pull the supplier's transactions in Xero, QuickBooks Online and FreeAgent

You are looking for a list of the supplier's bills, credit notes and payments for the period. The menu names below come from each vendor's official help.

How do I get a supplier statement in Xero?

The supplier sends their own statement. The Send statements option on a Xero contact is for customer statements. To see your side of a supplier's account, run the Supplier Bill Activity report, which shows bills, credit notes, overpayments and prepayments from one supplier over a period.

1. In the Reporting menu, select All reports.
2. Open Supplier Bill Activity (use the search field if needed).
3. Select the Contact and set the Date range.
4. Click Update. Under More you can include or exclude prepayments.

For all suppliers at once, the Payable Invoice Summary report lists bills, credit notes and overpayments for a period and can be exported to a spreadsheet. Both are described in Xero's help on contact transactions reports and the Payable Invoice Summary report. You can also open the contact from Contacts then All contacts and use the Activity tab.

QuickBooks Online

QuickBooks Online calls suppliers vendors. Under Reports, then Standard reports, use Find report by name to open Vendor Balance Detail (listed under What you owe) or Transaction List by Vendor. Set the report period and run the report. Intuit's help lists these in its reports included in your subscription, and the Export menu offers Excel or PDF, as in its vendor totals report steps. Which reports you see depends on your plan.

FreeAgent

Go to Contacts, click the supplier and open the Statement of Account tab. Enter a date range, choose All or Open or Overdue, then select Show Statement. FreeAgent's statement of account lists the items related to that contact, with an opening balance for anything outstanding from before your start date. You can save it as a PDF.

In all three, export to a spreadsheet and tick lines against the supplier's statement side by side.

Fewer differences to chase

Most differences start at capture: a bill nobody entered, or one entered twice. Datamolino captures supplier invoices from a folder's email address or uploads, so bills sit in one place, and flags a matching supplier and invoice number as a possible duplicate within the same folder. It exports checked bills to Xero, QuickBooks Online or FreeAgent. A statement you upload can be marked as an Invoice Statement, kept with that supplier's documents and exported to Excel for the tick-through; the matching itself happens against your ledger as described above. Practices that run this monthly across clients can see Datamolino for accountants and bookkeepers.

What is a supplier statement?

A supplier statement is the supplier's own list of what you owe them: opening balance, invoices, credit notes, payments received and a closing balance. You reconcile it against the supplier's balance in your purchase ledger.