Quick Guide on How to Do Supplier Statement Reconciliation

Inventory, especially the raw materials for processing and the merchandise for resale to the end customers, is without doubt one of your most valuable assets in business. Your business can’t operate without all the needed inventory. In addition, your business could lose profits if inventory is not properly monitored. It’s crucial that you perform supplier statement reconciliation regularly to ensure that, indeed, your vendors are charging your business the right amount for the physical inventory you have actually received. Otherwise, you may be paying more money for inventory and supplies, as well as services you have yet to receive.

Here are simple and easy steps that can be done to perform supplier statement reconciliations with just the vendor invoices, calculator, and pen and paper. You can also use a dedicated software for this task.

#1 Organize the Papers

Your first step is to organize your business’ inventory invoices according to their date, usually with the latest invoices being at the bottom and the oldest statements on top. You will then be able to refer to the invoices in an easier and faster manner, as well as identify the problem areas. You can also click on the “organize by date” option on the software.

#2 Match the Items

With the supplier statements on hand, you have to match their line items with your invoices to discover any discrepancies between the two sets of documents. Your records should be organized for this purpose, too, such as one of your employees reconciling the supplier’s statement with the shipments as these are received on site. Your employee should ensure that, indeed, the supplier statement reflect the correct quantity and dollar amount for each shipment.

#3 Check the Matching Items

You have to place check marks on both the supplier invoices and business statement (i.e., as prepared by an employee related to the details of the shipments for the month). If a certain shipment on both these documents match in terms of date delivered, type and quantity of items, and dollar amount, then place a check mark on the line item.

For example, a shipment of 20 cases of raw materials were delivered to XYZ Company to your business, ABC Corporation, on 1 August 2016. Both the XYZ supplier statement and your ABC statement reflect this shipment so put a check mark on the corresponding line.

#4 Circle the Discrepancies

As you check each item, you may come across a few or several discrepancies. You should take note of them by circling the items without matching invoices, or with incorrect quantities or dollar amounts, or with material mistakes (e.g., quality of the products), among others.

Aside from checking the individual line items, you should also check the total amounts on both sets of documents. You may find discrepancies there, too, but instead of immediately jumping to conclusions, you have to recheck in case there are mistakes, such as inaccurate calculation or number transposition. You can use these methods in checking for discrepancies regardless of supplier statement formats.

When dealing with discrepancies, especially when you have been overcharged by the vendor, you should always have valid proof to show. You have to call the vendor and call their attention to the discrepancies so that a two-way reconciliation of accounts can be made.

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