Supplier statement

A supplier statement is a document a supplier sends periodically, usually monthly, listing every transaction on your account with them: invoices raised, credit notes issued and payments received, ending at the balance the supplier believes you owe. It is a summary of the supplier's records, not a demand and not a tax document. Its value is as a second opinion: comparing it against your own purchase ledger is the standard month-end control in accounts payable, and the difference between the two figures is the thing worth looking at.

It is easy to confuse with a statement of account you send your own customers. They are the same document seen from opposite sides: one arrives from a supplier and is checked against the purchase ledger, the other goes out to a customer and is chased against the sales ledger.

How to reconcile a supplier statement

Work from the statement balance to your own and explain every difference. When the reconciling items account for the whole gap, the account agrees and nothing needs chasing. A worked month end:

1. The supplier's statement to 31 August shows a closing balance of £14,820. Your purchase ledger shows £12,100 for the same supplier. The gap is £2,720.
2. Invoice 40871 for £1,450 is dated 29 August, but the goods arrived on 2 September, so it is on the statement and not yet in your ledger. Deduct £1,450.
3. A credit note for £270 was agreed on 27 August for a short delivery. You have posted it; the supplier has not yet issued it, so the statement is still that much higher. Deduct £270.
4. A payment of £1,000 sent on 30 August was allocated by the supplier on 2 September, after the statement was produced. Deduct £1,000.
5. £14,820 less £1,450, £270 and £1,000 leaves £12,100, which agrees with the ledger. The account reconciles, and only the £270 credit note needs a call.

The three things that usually cause a mismatch

Nearly every difference is one of three, and knowing which it is decides whether to act:

• Invoices not yet in your ledger. Usually goods delivered near the month end, or an invoice sent to the wrong address. If the goods were received, post it; if nobody can find the delivery, ask for a copy before it turns into a duplicate payment.
• Credit notes. The slowest of the three, because a credit agreed in a phone call sits on nobody's system until the supplier issues it. Agreed credits should be written down with a reference and chased like an invoice.
• Timing of payments. A payment sent in the last few days of the month often lands on the next statement. These clear themselves and need no action beyond noting them.

Why you never post from a statement

A supplier statement is not a VAT document. HMRC's VAT record-keeping rules require you to keep copies of all the invoices you issue and all the invoices you receive, along with credit and debit notes, and to keep those records for at least six years. A summary of somebody else's ledger is not on that list. Post from the invoice, use the statement to find the invoices you are missing, and ask for a copy of anything on it you cannot match.

Zigaflow records purchase orders, delivery notes and supplier invoices against the supplier account, so working through a statement means reading one history rather than searching mailboxes. See purchase orders.